INFORMING CONSUMERS OF CSR IN

INTERNATIONAL TRADE

PRELIMINARY DRAFT
for background information at the
Workshop on Informing Consumers about Corporate Social Responsibility in
Production and International Trade
Rotterdam, The Netherlands
28 June 2006

OECD Secretariat

OECD Trade Directorate contact:

Barbara Fliess, Tel. +33 1 45 24 82 64; e-mail: barbara.fliess@oecd.org
Hyung-Jong Lee, Tel. +33 1 45 24 89 42; e-mail: hyung-jong.lee@oecd.org

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 TABLE OF CONTENTS

EXECUTIVE SUMMARY ............................................................................................................................ 4

I. Introduction.......................................................................................................................................... 7
A. Structure of report ....................................................................................................................... 7
II. Consumer and business perceptions of CSR and related information schemes ............................... 8
1. To what extent do consumers base their purchase decisions on CSR criteria?........................... 9
2. Information is a key concern for consumers............................................................................. 10
3. Business perspective ................................................................................................................. 12
Annex II.1: Findings from selected consumer surveys since 2000 illustrating consumer perceptions.... 14
III. Types of information schemes in use - Overview .......................................................................... 16
1. Standards and labelling schemes .............................................................................................. 16
2. Consumer guides....................................................................................................................... 21
3. CSR reporting ........................................................................................................................... 23
4. CSR communication through marketing strategy..................................................................... 26
Annex III.1: National and regional programmes in the OECD region..................................................... 32
Annex III.2: Selected standards and labelling schemes ........................................................................... 33
Annex III.3: Consumer guides in the internet .......................................................................................... 35
Annex III.4: Good practice in CSR reporting: Some examples ............................................................... 36
IV. Sectoral studies on CSR communication ....................................................................................... 37
A. Fisheries.......................................................................................................................................... 37
1. Production and trade ................................................................................................................. 37
2. Corporate social responsibility of fisheries companies............................................................. 38
3. Providing information on fish and fish products ...................................................................... 39
4. Conclusion ................................................................................................................................ 44
Annex IV.A.1: Fisheries-specific environmental and social certification and labelling schemes ........... 45
B. Cut flowers ..................................................................................................................................... 46
1. Production and trade ................................................................................................................. 46
2. Channels of distribution and major actors ................................................................................ 47
3. CSR issues arising in the cut flowers industry.......................................................................... 48
4. Providing CSR information about cut flowers.......................................................................... 49
5. Company strategies................................................................................................................... 53
6. Some concluding observations.................................................................................................. 55
Annex IV.B.1: The leading suppliers of cut flowers and foliage to The Netherlands, 2004 .................... 56
Annex IV.B.2: Select labelling schemes applicable to cut flowers.......................................................... 57
C. Cosmetics ........................................................................................................................................ 58
1. Industry overview ...................................................................................................................... 58
2. CSR in the cosmetic industry..................................................................................................... 59
3. Communicating CSR in cosmetics sector.................................................................................. 60
4. Conclusion ................................................................................................................................. 63
D. Textiles and clothing sectors .......................................................................................................... 64
1. Industry overview ...................................................................................................................... 64
2 CSR issues in textiles and clothing ............................................................................................ 65
3. Communicating CSR in the textiles and clothing sector ........................................................... 66
4. Tentative conclusions................................................................................................................ 73
Annex IV.D.1: Selected CSR textile and clothing labels.......................................................................... 74
V. Concluding remarks ....................................................................................................................... 75

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 *
EXECUTIVE SUMMARY

Trade policy makers have a stake in public and private efforts to address consumer concerns
about the circumstances under which goods they buy are produced. The private sector has responded to
these concerns by widespread voluntary adoption of policies of corporate social responsibility (CSR).
Notwithstanding this trend, the actual effects of CSR on the perception and behaviour of consumers are
mixed and unclear because information about CSR policies and implementations is not always readily
available to consumers.

This study reviews various information schemes used to inform consumers about CSR issues,
notably the social conditions and environmental impact of production, and investigates in greater details
how and to what extent these schemes are used in a selected number of sectors, namely cosmetics, cut
flowers, fisheries and textiles and clothing.

Existing research reveals that many consumers care about business performance on
environmental and social conditions of production and are interested to buy goods that match their
expectations in this respect. However, their actual purchasing behaviour does not match what they say they
would do. Several reasons may explain this gap. Polls suggest that information availability could be one of
the missing links between potential consumer demand and purchasing behaviour.

The private sector is responding to the growing awareness of consumers on these issues
conditions with a variety of information schemes. They range from voluntary standards and labels to
corporate reporting and company marketing strategies and are briefly reviewed in this study. These
systems set quality, social or environmental standards and typically entail a large degree of coordination,
traceability and monitoring along different agents of the supply chain, with a variety of stakeholders
participating.

Different types of schemes can complement one another when they comprise different
characteristics of information. Some schemes are useful for carrying product-related information while
others are good at presenting company-level message. For example, labels are easily associated with
products but reports usually convey information at the company level. They also differ in terms of third-
party involvement. Whereas third parties play an important role in the operation of labelling and consumer
guides, reporting is produced by companies usually with limited third-party involvement. The paper
describes four different types of information schemes through which consumers obtain information about
CSR practices, both product-related and company-related: certification and labelling, CSR reporting,
consumer guides and corporate marketing strategies. The use of these schemes is then examined in the case
of four sectors: fisheries, cut flowers, cosmetic, and textiles and clothing.

*
The views in this preliminary report are those of the authors and are not necessarily shared by the Members
of the OECD. The study has been prepared in collaboration with Osvaldo R. Agatiello, consultant, and
Olivia L. Dubreuil of the OECD Trade Directorate. Guido Berens of RSM Erasmus University provided
literature on relevant marketing research.

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 The main findings of the sectoral studies are:

Since many fish species are over-exploited, sustainable fishing has emerged as a key concern in
fisheries. Being aware of depleting fish stocks, fish consumers nowadays are more interested in gaining
information on, beyond the quality and price, how and where the fish and seafood they buy were caught
and produced. Several labelling schemes, such as the MSC logo and Dolphin-safe tuna, have been
introduced in order to certify fish and seafood produced in a sustainable way. Labelling is the most widely
recognised CSR information scheme in fisheries, although its market impact remains modest. Meanwhile,
there are indications that CSR issues are becoming increasingly evident in the fisheries sector; yet other
information systems such as company reports on CSR are still relatively underdeveloped and consumer
guides do not focus on fish and fish products, although some stakeholders have begun to publish
specialised fish guides. Like in retailing of other consumer goods, big supermarkets have gained large
market share in fish and seafood sales making innovations in seafood trading and marketing. Based on
their market power, they are likely to become more capable of satisfying consumer demand for information.

In the market for cut flowers, provision of information to consumers is not yet well developed as
the CSR disclosure in this industry seems to be more business-to-business oriented than business-to-
consumers. This highly competitive market has seen a gradual shift of production away from developed-
country to developing-country suppliers including Colombia, Ecuador and Kenya. Starting in the early
1990s, campaigns by activist groups have highlighted a number of workplace and environmental problems
on developing-country flower farms, ranging from low wages, long hours and poor sanitary standards to
the hazardous use of pesticides and land and water pollution. While these campaigns have sensitised
consumers to issues linked to flower production, when they shop for cut flowers they have difficulties
distinguishing between products on the basis of their production conditions. Certification and labelling
schemes are relatively well established but focus largely at the business-to-business transaction level. This
means that the consumer most often does not see a label and has no knowledge of flowers that are certified
as coming from farms with socially responsible production. While efforts to promote consumer labels are
picking up, the nature of the product, and perhaps also the fact that in many countries flowers still are sold
by many small shops– may constitute special impediments to supplying consumers with relevant
information in the stores. Neither corporate CSR reporting nor consumer guides are useful sources of
information for consumers. While marketing of product and production characteristics is widespread and
lively in the emerging market for organically grown flowers, company advertising and promotional efforts
are not prominent when it comes to the larger flower industry and CSR issues. As far as cut flowers are
concerned, the consumer will have to actively search for production conditions related information
wherever it is available.

As a pioneering industry in the area of CSR, the cosmetic industry is one where CSR
communications is sophisticated, well advanced and easily observed, although what is disclosed is mostly
information related to product characteristics, not production conditions. As early as in the 1990s, when the
issue of corporate social responsibly was not yet on the radar screen of busy corporation CEOs, SMEs
from the cosmetic sector started to introduce this notion, and to report on their social and environmental
impact. Cosmetic products are intimate to the consumer, as he or she uses them directly on body or face.
Moreover, CSR disclosure has brought consumers’ trust towards a company. As a result, these cosmetic
companies quickly gained the necessary market shares. They gained consumer trust, which in turn enabled
them to compete with the big corporations and even become multinationals themselves. Remarkable in this
industry is that SMEs have set the standard, and multinational corporations are now following in their
footsteps and surfing on the natural-product, social and environmentally friendly company. They are now
competing on CSR grounds to win those hard-to-get market shares. The industry has pioneering CSR-
reporting companies, and it continues to hold this advantage over other industries. Cosmetics companies
are not just trying to get into a niche market by publishing CSR reports; through internal CSR alignments

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they are answering to a widely shared consumer concern about trust in the companies that produce those
products that people use on themselves.

In the textiles and clothing industry, companies use a variety of approaches to deliver and
improve upon the CSR information conveyed to multiple stakeholders, and the image that they project.
NGOs highlighting problems with environmental and social standards in the supply chains for these
products and child labour have contributed to the development of a considerable number of labels, but
information on production under these labels is not broadly available to the consumer. CSR corporate
reporting is broadly used in this sector as an information channel to meet increasing demands from NGOs
and other stakeholders for more information on the working and environmental conditions in the supply
chain. Many textiles and clothing companies have global sourcing and operating guidelines of their own
and provide related information. There are a large number of consumer-information publications. Besides
the substantial information that is provided by regular or CSR-dedicated consumer guides, NGOs through
their own, often website-based guides try to influence consumers by reporting on the social and
environmental performance of companies. Brand positioning is important in the clothing industry and is
thus reflected in different approaches of clothing companies towards CSR.

One observation drawn from this study is that consumers are increasingly interested in finding out
about social and environmental practices of companies; however, they are finding it hard to gather the
information necessary to knowingly make a purchase decision. Making CSR visible to consumers
constitutes a challenge for businesses, and companies are competing to find new inventive ways to
communicate about their responsible practices.

The sectoral studies show that the level of information available to consumers varies among
industries and among companies, and that consumers are driving this trend toward corporate social
responsibility. Other players, such as employees, consumer guides, the media or the NGOs are also taking
an important part in the CSR disclosure process.

Documenting in some detail important recent developments in different industries, the sector
analyses raise some issues for reflection and discussion, including the following questions: Can good
practices in information provision be identified? What role does the retail sector play in creating a market
for production according to higher environmental and social standards? What would make companies
interested and willing to seek collaboration with other companies when promoting or applying certain CSR
standards and related information schemes?

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I. Introduction

1. Consumers are a key constituency benefiting from trade liberalisation. Therefore, where
perceptions about negative effects of globalisation on the environment and social standards are shaping
consumer opinion and behaviour, many trade policy makers see a need to address this issue.

2. The private sector has responded to these perceptions by widespread voluntary adoption of
policies of corporate social responsibility (CSR). Definitions of CSR vary across cultures and stakeholders
and can encompass a broad range of activities and issues; however, many CSR practices seek to respond to
the issue of how a company treats its employees and the environment in which it operates.

3. Building on a proposal by the Netherlands, this preliminary draft study documents and analyses
existing information schemes that are part of a CSR policy and which provide consumers with information
on the social and environmental conditions of production. This narrow focus for the project implies that it
does not examine corporate philanthropy, efforts to combat corruption or other ethical behaviors of
companies. It will also not seek to judge any standard applied.

4. Overall, the objective of this exploratory work is not to advocate regulations for corporate
behaviour or propose measures that restrict trade, but to inform trade policy makers on how private
companies as economic operators that have an obvious strong interest to track any possible trends in
consumer perceptions go about in communicating their CSR policies with respect to social and
environmental conditions of production to enhance consumer choice and increase confidence in
international free trade.

A. Structure of report

5. The report is organised as follows. Drawing on recent opinion surveys from OECD and non-
OECD countries and other available research, Chapter 2 documents consumer attitudes towards CSR and
recent market trends for some products bought based on CSR criteria. It then examines what CSR-related
information consumers expect to receive in the marketplace as well as what information they actually
receive from companies or other stakeholders through various communication channels.

6. Chapter 3 presents an overview of different types of communication channels or information

schemes that companies can use to inform consumers about their CSR policies and notably conditions of
production. These schemes range from certification and labeling schemes to traditional product advertising
by companies.

7. In Chapter 4, the question of whether and to what extent these communication channels are being
used to inform consumers about CSR practices, and their effectiveness in reaching consumers and having a
market impact, is examined in more detail for a select set of internationally traded products. The products
covered in this report are cosmetics, cut flowers, fish, textiles and clothing. With the exception of cosmetics,
these are sectors included in work that OECD recently carried out on Trade and Structural Adjustment
(TASAP), which addressed similar concerns evolving around the globalisation of production and
outsourcing practices.

8. Chapter 5 offers preliminary concluding observations and mentions issues that merit further
consideration.

9. For this preliminary report, research has concentrated on documenting approaches and initiatives
taken to inform consumers of what is being done. What form do these information schemes take and how

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do they operate? What do we know about their relative strengths and weaknesses, from both a consumer
and a company perspective?

10. Implementing CSR in today’s dynamic environment for international trade is challenging.
Chains of production and distribution are becoming longer and more complex. A growing number of
countries are acquiring a place within these chains. Production standards relating to environment and
labour in these different countries are not always at the level that consumers expect. Effective supply chain
management is now critical for many firms to remain competitive in business, and the study will consider
the question of how companies provide consumers with information about the CSR practices also of their
suppliers and sub-contractors. A related issue that will be analysed is the extent to which consumers are
among the target groups that organisations’ communication strategies aim at.

11. It is hoped that the final report will also draw lessons and identify good practices concerning
effective communication to consumers about CSR, by comparing different information schemes, including
cooperation within supply chains to ensure that information is provided to consumers and other
stakeholders. It is expected that important stakeholder input feeding into this more fully developed final
analysis will come from consultations and discussions at a workshop scheduled to take place in June. It is
expected that this workshop, which is being organised by the Netherlands government, will bring together
representatives from companies (manufacturing/retail/wholesale/agrifood) with relevant experience on
CSR, consumer organisations, public and private standard setting bodies (ISO), UN Global Compact and
Global Reporting Initiative, Ethical Trading Initiative, Fairtrade Labelling Organizations (FLO), Business
Compliance Initiative (BSCI), academia, the OECD Trade, Consumer and Investment Committees and
relevant OECD Directorates.

12. Following this workshop, the final report should be completed by September 2006.

II. Consumer and business perceptions of CSR and related information schemes

13. Societal expectations about CSR have grown during the last decades and so have company
commitments to CSR. These expectations on one hand, and commitments on the other hand, are having
now a noticeable influence on the marketplace for goods and services.

14. A growing body of data from surveys and other studies finds that many consumers care about the
ethical performance of a business. A large percentage of consumers say that they care about manufacturing
standards, and there is other evidence that consumer are more and more interested in CSR and issues of
socially responsible production, loosely defined as practices of production that respect people,
communities and the environment.

15. Some of the results from a growing number of surveys examining aspects of CSR and consumer
behaviour are:

• 70% of consumers polled across 12 European countries say that a company’s commitment to
social responsibility is important when buying a product or service (MORI, 2000).
• 71% of the British public says when multinational enterprises operate in developing countries they
should ensure good working conditions and fair treatment for their workers regardless of whether
the law requires it, and 51% go further and think that companies should contribute to social issues
in these countries, such as healthcare, housing and education. Only 10% say they only need to do
what the law requires in these countries (MORI, 2003).

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 • 95% of Americans agree that U.S. companies should have more than one purpose (profit), and that
they also owe something to the communities in which they operate (Business Week/Harris Poll,
2000).
• 68% of the Canadian public is paying attention to issues related to CSR (Savas and Reid, 2005).
• 58% of Koreans say they are interested in products that are environmentally friendly, especially in
terms of ingredients and manufacturing process (Korean Research Inc, 2005).

16. The ethical dimension of products and production is becoming part of consumers’ utility
functions and can be a business advantage to companies that can integrate and communicate CSR
effectively.

1. To what extent do consumers base their purchase decisions on CSR criteria?

17. We expect consumers to express their CSR preferences through their product (and services and
equity) purchase decisions. However, there is a difference between what consumers say and what they do,
which can be gauged by asking consumers and actually verifying their behaviour.

a) What consumers say…

18. As some of the consumer survey results presented in the Annex II.1 show, many consumers
express a willingness to pay more for products associated with acceptable environmental and labour
conditions of production. Evidently, this willingness to pay depends on individuals’ level of income and
other factors and has been observed to differ across countries.

19. Also, while the conditions under which a product is produced are important, they are not
necessarily leading the list of criteria that people consider when they shop. In fact, only a minority actually
places CSR anywhere near the top on their list of decision-making criteria.1 For example, when asked only
5% of the British public places ethical considerations above all others in their purchasing decisions (Cowe
and Williams, 2000); among UK food shoppers, 70% base their purchasing decisions on price, taste and
sell-by-date – not ethics (Doane, 2005). When asked, German consumers ranked quality first, then price,
environmental friendliness of products, followed by look and design, brand, country of origin and image of
producer. When of the same quality and price as non-CSR products, 10% of German consumers always
give preference to CSR products (imug, 2003).

b) … and what consumers do

20. What is the observable level of consumption of products originating from socially responsible
production? In most OECD countries, most products falling in this category enjoy relatively modest but
usually growing market shares.

21. Consider for instance the following market trends in Europe:

1 Consumer surveys do not provide any direct correlation between what consumers say and the actual
purchases made. Consumer behaviour can be driven by many different motivations, rationales, excuses and
justifications, of which concern for CSR is only one. Moreover, it is difficult if not impossible to isolate the
impact of CSR information from other factors determining purchasing behaviour, such as price, quality,
safety, or prior personal experience.

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 • 11% of French consumers bought products carrying the Max Havelaar label2 (coffee, chocolate,
rice and diverse fruits) in 2004. Consumption of Max Havelaar certified products per year and
inhabitant amounted to 61 cents in France, more than EUR 10 in Switzerland, more than EUR 2 in
the Netherlands, and EUR 1.50 in the United Kingdom (Ipsos, February 2004).
• In the United Kingdom, sales of Fairtrade certified products rose 40% in 2005 alone and now are
worth £195 million annually – tiny by total consumer spending but growing (The Guardian, 8
March 2006). Sales of ethical clothing, which includes organic cotton, fair trade clothes and
garments made from recycled material, was up 30% from £33 million in 2003 to £43 million in
2004. Also, 3 in 4 UK households reportedly bought at least one organic food product during 2004,
when sales stood at £1.1 billion, up 10% from the previous year. More than half of all baby food
sales in 2004 were organic (The Co-operative Bank, 2005).
• 38% of Austrian consumers participating in a survey in 2002 stated that they had once purchased a
Fairtrade product (Grandits, 2002); in France it was almost 25% of participants in a recent poll
(Alter Eco, 2005).

22. While actual demand and markets are growing, figures nevertheless suggest that behaviour does
not quite match attitudes. There is a gap between what consumers say and do. While there may be various
motivations rationales and excuses that drive the actual purchasing behaviour of people and can help
explain this d-i-s-c-o-n-n-e-c-t, one important missing link for engaging those consumers who say they
care but do not purchase based on their stated preferences, is information availability.

2. Information is a key concern for consumers

23. The potentially significant role of effective communication is underlined by studies showing that
consumers do not feel very well informed about CSR activities of companies, including about conditions
and impact of production. Notwithstanding the intensification of marketing communication to which
shoppers are daily exposed, this feeling has become more pronounced in recent years. The information
provided about products and services is not sufficient to enable consumers to make a conscious purchase
decision that takes account of criteria such as socially responsible production.

24. When deciding what products they should buy, consumers depend on available information about
the different qualities or attributes of the products. However, they typically live and shop in an
environment of imperfect and asymmetrical information. In particular, conditions of production constitute
an “invisible” or “credence” product attribute; the shopper cannot identify and verify the attribute when
making the purchase, or even after consumption. This situation creates demand for additional information
and information that comes from a trusted source and is presented in a user-friendly manner. It requires
that companies communicate CSR effectively.

25. Consumers’ information needs and the impact on their purchasing decisions are amply
documented by surveys. For example:

• A poll conducted among Austrians found that 69% of respondents wish to obtain more information
on whether the firm producing a product behaves ethically or responsibly vis-à-vis society (UBIT
and FO.FO.S., 2005).

2 These are products that carry the Max Havelaar Fairtrade Label, which is awarded by the Max Havelaar
Foundation to products that respect international Fair Trade standards. The Foundation is present in 17
developed countries and a member of FLO (Fairtrade Labelling Organisations). It supports almost 800 000
producers of coffee, tea, bananas, cocoa, honey, sugar, etc in 38 countries in Latin America, Africa and
Asia. (http://www.maxhavelaar.ch/en/maxhavelaar/index.php)

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 • 74% of the British public agree to some extent that their purchase decisions would be influenced if
they had more information on company’s ethical behaviour, with 25% agreeing strongly (MORI,
2003).
• 39% of French consumers state lack of information as the main reason for not buying fair-trade
products (Alter Eco, 2000).
• According to a 2004 survey of opinion elite in 10 countries (people who are among the top 10% of
each society in terms of media consumption, interest in public policy and civic participation), three
quarters of respondents say they have purchased a company’s products or services in response to
positive news about a company’s social responsibility (APCO, 2004).
• There are very significant differences in the public’s understanding and recognition of the Fair
Trade Certified concept/labels across countries. Recognition ranges from 6% of the public in
Norway (where commercialisation of Fair Trade labelled products through specialised shops has
not much taken hold) to 60% in Switzerland and 74% in the Netherlands (EFTA, March 2003).

26. At times consumers are confused or even misinformed, and they may not know the meaning of a
label or logo. However, where sufficient information is provided, such as through product labels,
consumers recognise this information and use it, provided they trust the labels. For example, the
environmental “Blue Angel” and “Bio-Stamp” labels are recognised today by a very large majority of the
German population. Both labels influence the purchase decisions as well, because half of those
participating in a 2004 survey state that they look for these particular symbols when shopping (Kuckartz
and Rheingans-Heintze, 2004).

27. Consequently a significant potential for encouraging consumption of CSR products through
marketing and advertising lies in a stronger focus on the informational value of communication (UNEP,
2005).

28. This raises an important question: how should CSR be communicated to reach consumers? This
obviously depends on a variety of factors such as cultural factors, product characteristics, the different
consumer profiles (age, income, education) etc. In particular, consumers’ attitudes towards different
communication channels can vary considerably, as the following examples illustrate:

• When asked how companies should communicate their social involvement the average European
citizen preferred information on products and labels, while posters and leaflets as well as ‘league
tables’ were viewed with less enthusiasm. Also, proactive and voluntary communication by
companies about their social activities is widely preferred to compulsory environmental, social and
community reporting. Furthermore, survey responses especially from Scandinavia showed a
preference for communication through websites. Overall, the European public wished activities to
be communicated and “shared”, and not through classical advertisements (MORI, 2000).
• A 2005 survey of 140 Japanese stakeholders (including consumers, NGOs, business leaders)
found that for information on CSR issues a majority (53%) trusted news articles and 43% trust
personal contacts (family and friends), but just 3% trust advertising. Many respondents report they
use company websites to get info about a company, followed by newspapers (Edelman, 2005).3
• People appear more inclined to believe what they hear about a CSR programme from a source they
know rather than from a glossy report. Research has found UK consumers to be more likely to get
information on a company’s CSR practice by word of mouth than from any other source (MORI,
2003).

3 See http://www.japancorp.net/Article.Asp?Art_ID=11509

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3. Business perspective

29. Viewed from a business perspective, companies that address CSR can not only survive but thrive
in a highly competitive marketplace. If consumers have a preference for products and services produced
under responsible conditions, a niche will develop in the marketplace for them, provided these consumers
are willing to pay a higher price for such products.

30. However, companies can benefit from CSR even when consumers are not willing to pay more.
Although the links between implementation of CSR policies and business performance are difficult to
prove, research and anecdotal evidence points to advantages that range from stronger financial
performance and profitability through operational efficiency gains to improved reputation and branding.

31. Is CSR profitable? Empirical analyses of the relationship between CSR and profitability began to
appear in the mid-1970s, but did not result in a consensus. The lack of clear-cut relationship between social
responsibility and the bottom line, and the difficulty to gather data about the wide range of CSR behaviours
for a sufficient number of made it difficult to come out with a valuable theory. The perception that CSR
entails a zero-sum trade-off with corporate economic self-interest is strongly identified with neo-classical
economics. Even CSR defenders accept this premise, while at the same time insisting that companies have
a broader responsibility to society. The classic literature of business and society asserts that while CSR
might entail short-term costs, it pays off for the firm in the long run (Burke and Logsdon, 1996).

32. Research suggests that CSR brings with it cost-related advantages, market advantages, and
reputation advantages (Grieg-Gran, 2002):

• Cost related advantages, because good working conditions should lead to higher productivity,
changing before regulation changes gives a competitive advantage, insurance premium should be
reduced for companies perceived as less risky in the financial market, and so on.
• Market advantages, because CSR can assure consumer loyalty, it may also secure higher prices for
the products, it also enables to access certain environmental sensitive markets.
• Reputation advantages, because responsible business practices has a positive impact on the
reputation of a company.

33. Loss of reputation on the other hand affects sales, particularly when NGOs campaign for
consumer boycotts. Moreover, the company’s commitment to corporate social responsibility and overall
reputation may be an important factor for its current and prospective employees. According to Fombrun
(2000) intangible assets, such as reputation, of publicly traded companies in the United States and the
UNITED KINGDOM constitute 55% of their market valuation, and this proportion has grown rapidly over
the last 40 years.

34. As a matter of fact, the ABI report on social responsibility argues that financial benefits from
CSR activities are difficult to quantify because they represent investment in intangible assets (ABI, 2001).
However, a study of the University of Chicago found, in 2002, that Business Week mean ranking of
financial performance of the 100 best corporate citizens is 10.42 percentiles higher than that of the
remaining companies. They also calculated that Fortune magazine’s mean ranking of most admired
company of the 100 best corporate citizens is 19 percentiles higher than that of the remaining companies.

35. Further support comes from a survey covering 33 countries around the world, in which the
majority of CEOs across regions and industries subscribed to the view that CSR is important for any
company’s profitability (PriceWaterhouseCoopers and World Economic Forum, 2002). Two other studies,
one asking Spanish business executives and the other executives of (often highly CSR-experienced)
companies operating in the Latin American region, come to similar conclusions, namely that improved

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reputation and competitive advantage are leading factor motivating companies to embrace CSR (Latin
Trade, 2004; PriceWaterhouse Coopers, 2003).

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 Annex II.1: Findings from selected consumer surveys since 2000 illustrating consumer perceptions
Survey
Survey of a 1000 respondents each in
21 countries [here a subset of 100
respondents in 20 countries]
(GlobeScan, 2005)
Survey of 410 opinion elite panelists
from 10 countries, conducted 5
February - 27 April 2004 (APCO
Insight, 2004)
Survey of 12,000 individuals across 12
European countries (MORI -Market
and Opinion Research International,
September 2000)
Survey of 4500 French individuals
(Ethicity/Carat Média Marketing,
December 2003)
Survey of 600 French consumers
(Alter Eco France, March 2000)
Survey respondents from Findings
21 developed and When asked what the most important thing was a large company should do to be socially responsible:
developing countries ▪ fair treatment of employees is regarded as the most important descriptor of social responsibility in
many of the surveyed countries, including the United States, Switzerland, Italy, Philippines, and all
Latin American countries surveyed. (on average it received the highest score, 26 out of 100
respondents );
▪ Environmental protection was the top mention in Canada, United Kingdom, Australia and Indonesia
(on average it received the second highest scope, 19 out of 100 respondents);
▪ Turks thought charitable donations were most important, while South Africans and South Koreans
most often said that companies should give back to the communities in which they operate (the average
respondent of the 20-country sample ranked these items lower)
10 countries in North ▪ A strong majority said they had purchased a company’s products and services (72%) and had
America, Europe and recommended the company to others (61%) in response to positive news about a company’s social
Asia-Pacific responsibility.
▪ Negative news about a company’s CSR also impact behaviour (boycotts) – but slightly less than
positive news.
12 European countries – ▪ 70 % of European public said that a company’s commitment to social responsibility was an important
Belgium, Denmark, consideration when buying a product or service. This was particularly prominent in Spain (89%
France, Finland, Germany, agreed) and the Netherlands (81% agreed).
Great Britain, Italy, ▪ The willingness to pay more differs across countries. In 7 of the 12 European countries a substantial
Netherlands, Portugal, portion of interviewees said they would be willing to pay more for socially and environmentally
Spain, Sweden and responsible products. This was particularly true in Denmark. At the other extreme, in Italy only 1 of 6
Switzerland. said that they would pay more.
France ▪ 77% of respondents were willing to pay more for products made under socially acceptable working
conditions; 80% of respondents were willing to pay more for products made under environmentally
sound conditions.
France ▪ 64% of participants said they would like to know the conditions of production of the products they
buy ;
▪ 73% said a social label would influence their purchase decision;
▪ 58% said they would be willing to pay more for a product that was socially certified (10% more on
average)
14
Survey of 1000 Germans, conducted
14-25 July 2003
(Verbraucherzentrale
Bundesverband, 2003)
Survey by Confederatión de
Consumidores y Usarios (CECU,
2004)
Survey of British public – 2026 British
adults, interviewed between 7 July and
11 August 2003 (MORI, 2003).
Canada survey (GlobeScan/HP, 2005)
Poll of Canadians (Ipsos Reid, 2003)
Survey of 1000 South Korean
consumers’ perceptions on eco-labels
(Korean Research Inc, 2005)
Source: OECD
Germany ▪ The leading company selection criteria mentioned were: No child labour (89% of respondents),
environmentally friendly products (89%) and economical use of raw materials and energy (86%) and
creation of jobs (85%).
▪ The importance of similar or same information varied across products. For example, respondents
ranked the need for more information about respect of social production standards higher for food
products (score = 71 on importance index) than for textiles (score = 66). They ranked the need for
more information about environmentally friendly production higher for electricity (score = 68) than
textiles or automobiles (score = 64 each)
Spain ▪ 40% of respondents stated they were unwilling to pay more for a SCR product; 46% were willing to
pay 10% more and 10% were willing to pay between 11% and 25% more.
United Kingdom ▪ Around 8 in 10 of the British public said it was important to know about a company’s activities in
society and the community when forming an opinion of it;
▪ 38% said it was very important that a company showed a high degree of social responsibility when
they were deciding to purchase. This share has seen some decline over the last few years- it stood at
46% in 2001, according to a similar poll by MORI, having risen dramatically between 1997 and 2001.
Canada ▪ A large majority (92%) of Canadians surveyed said the more socially and environmentally responsible
a company is, the more likely they are to purchase their products or services;
▪ 91% said they preferred to work for a company that was socially and environmentally responsible.
Canada ▪ 55% of Canadians said they had consciously decided to buy a product or service from one company
over another because they felt the company was good corporate citizen. These results are consistent
with a 2002 Environics poll conducted in Canada, which found that 50% of respondents had rewarded
companies they saw as being socially responsible.
South Korea ▪ 58% of respondents expressed interest in environmentally-friendly products, attaching importance to:
ingredients and manufacturing process, consumption and disposal.
▪ 21% stated they had used eco-labelled goods and 73% indicated they would buy environmentally-
friendly goods in spite of their premium.
15
III. Types of information schemes in use - Overview

36. The emergence of a variety of voluntary regulatory systems addressing CSR issues is a key
element of the current globalisation process in the production, trade and consumption of goods and
services. As a response to a growing demand for information about production conditions by consumers in
OECD countries, certification and labelling schemes, codes of conducts, reporting, and other private self-
regulation regimes have appeared in many global economic sectors. These systems set quality, social or
environmental standards, and typically involve a large degree of coordination, traceability and monitoring
along different agents of the supply chain. Certification and labels by third-party, reporting by producers
and product marketing, are all tools of supplying information to the marketplace and ultimately enabling
the consumer to make purchasing decisions with knowledge and confidence.

37. Different types of schemes can complement one another when they comprise different
characteristics of information. Some schemes are useful for carrying product-related information while
others are good at presenting company-level message. For example, labels are easily associated with
products but reports usually convey information at the company level. They also differ in terms of third-
party involvement. Whereas third parties play an important role in the operation of labelling and consumer
guides, reporting is produced by companies usually with limited third-party involvement. This chapter
describes four different types of information schemes through which consumers obtain information about
CSR practices, both product-related and company-related: 1) certification and labelling, 2) CSR reporting,
3) consumer guides and 4) corporate marketing strategies.4

1. Standards and labelling schemes

38. Labels are any words, particulars, trade marks, brand names, pictorial matter or symbols on any
packaging, document, notice, board or collar accompanying or referring to a product (EEC REG 2092/91).
Social and environmental labels are examples of approaches to providing information about social and
environmental dimensions of business (Zadek, Lingayah and Forstater, 1998). These labels carry
information about environmental and social conditions of producing the product accompanying the label
and/or about the environmental quality of the product (e.g., energy efficiency). They provide consumers
with information about the production of the product that they purchase and hence help them choose goods
and services produced in environmentally and socially friendly ways. Enterprises committed to CSR may
take advantage of labelling schemes to communicate their commitments to and actions in support of social
and environmental causes.

39. There are hundreds of labelling schemes operated by national, regional and local governments,
enterprises and industries, or non-governmental organisations. Some are mandatory and others are
voluntary. These schemes, particularly third-party certification labels, are generally developed and operate
based on the following procedures (modified from OCDE/GD(97)105):

4 In 2001, OECD held a workshop on information and consumer decision-making for sustainable
consumption, at which information channels such as ones examined in in this report were discussed
(OECD, 2001).

16
 Product selection
↓
Development of draft standard
↓
Public review process
↓
Adoption of final standard
↓
Application to competent body for the label
↓
Certification through testing and verification
↓
Licensing and monitoring

a) Main labelling schemes operating in OECD countries

40. A large number of new labels have sprung up in the market since the 1970s with claims relating
to animal rights, to the environment and, more recently, to social issues such as child labour. In particular,
the number of labelling schemes has soared since the 1990s. It is difficult to present exactly how many
labelling schemes have been developed and are operating worldwide because they are widespread and
different from one another in terms of characteristics, operating mechanism and targeting products of the
schemes.

41. The literature review reveals a patchy picture of figures on labelling schemes:

• The WTO/CTE report published by the WTO Committee on Trade and Environment on 29 June
2000 provided a list of 85 technical regulations concerning environmental labelling and marking
requirement notified under the TBT Agreement between 1995 and 1999.
• In 1998, the US Environmental Protection Agency the documented a variety of different types of
labelling programmes in the United States and primarily voluntary, seal of approval, programmes
in other countries, providing summaries of 49 environmental labelling programmes under
operation and five programmes in development.
• In respect of Eco-Label Guides, the website run by the US Consumer Union lists 137 labels found
in the US market, as of April 2006, under nine categories, namely organic, pest management,
social responsibility, no genetic engineering, sustainable agriculture, sustainable fishing, animal
welfare, sustainable wood and general claims.
• The New Economics Foundation’s 1988 report on social labels included a database of 10 social
labels.

42. Simply put, eco-labels are symbols or logos that indicate overall environmental characteristics of
the product and/or environmental conditions of production. The German Blue Angel is the first and oldest
eco-label initiative, launched by the Federal Environment Ministry in 1977. In the EU, the European Eco-
label “the Flower” has been operating since 1993 as a part of European policy of promoting sustainable
consumption and production. National and regional eco-labelling initiatives have been developed for
manufacturing goods and their organisations are associated under the umbrella of the Global Ecolabelling
Network (GEN). Annex III.1 provides information about major eco-labelling schemes operating in OECD
countries, including their product coverage.

17
43. The precursor of social labels was associated with the trades union and the co-operative
movement (Zadek, Lingayah and Forstater, 1998). In the United Kingdom, Rochdale Pioneers created the
Co-op brand linked with the co-operative movement in the 19th century. In the US, the National Consumer
League developed and operated the use of the White label on women and children’s underwear which
guaranteed that they were made in factories adhering to all factory laws and employing no children under
the age of 16. However, most social labels as we know today came into existence in the 1990s. In contrast
to eco-labels, social labels are relatively new and not numerous. For eco-labels, national or regional
initiatives have been developed; however, there is nothing similar for social labels. Enviornmental
standards can relate to product-related Production and Process Methods (PPMs) or non-product-related
PPMs, whereas social labels convey information on non-product-related PPMs.

44. Many social labelling schemes target consumers in developed countries by providing information
on producers in developing countries. Most of them address primarily export markets involving retail
traders with market niche products. Drawing on Zadek, Lungayah and Forstater (1998), social labels can
be classified into the following five categories, along with some examples:

• Self-declared: CWS ‘99’ Tea Corporate Brands.

• Industry body: British Toy and Hobby Association, EUREPGAP.
• Partnership: FIFA/ICFTU, ‘No Sweat Label’ US, Forest Stewardship Council, SA 8000.
• NGO-led: Clean Clothes Campaign, Fair Trade marks, Rugmark.
• Official: US ‘Trend setters’ list, Kaleen, Investors in People.

45. Annex III.2 provides a summary of the main environmental and social labelling schemes,
focusing on their origin, product coverage and market reach.

b) Labelling-related interests and concerns

Labels as possible trade barriers

46. A 1997 OECD study of eight national eco-labelling schemes did not produce any hard evidence
that those labels under study had changed trade flows (OECD, 1997). A UNEP study scrutinised the trade
impact of five selected eco-labels on trade flows from developing countries and concluded that no reliable
information was available on the extent to which any of the five eco-labels had affected trade flows from
developing countries because of their possible role as technical barriers to trade (UNEP, 2005). According
to the WTO, “… members generally agree that voluntary, participatory, market-based and transparent
environmental labelling schemes are potentially efficient economic instruments to inform consumers about
environmentally friendly products. Moreover, they tend to be less trade restrictive than other instruments.”5
However it also cautions that environmental labelling schemes could be misused for the protection of
domestic market.

47. Some market-access concerns exist however. At the OECD Global Forum Workshop on
Environmental Requirements and Market Access, held in Delhi, India, in November 2000, several
developing-country participants expressed concerns that both voluntary and regulatory environmental
labelling and certification programmes may not be taking local market conditions and capacities into
account, which they argued is a barrier to developed-country markets (OECD, 2003). As seen by The Voice
of Business in Europe (UNICE), “a fundamental problem inherent in eco-labelling is that it is often more
costly and burdensome for foreign producers to obtain an eco-label than for domestic producers, thus
constituting an unnecessary barrier to international trade” (UNICE, 12 June 2003).

5 See the WTO website (http://www.wto.org)

18
48. The WTO has discussed a variety of issues on the environmental labeling since 1994. The WTO
Committee on Trade and Environment (CTE) and the Committee on Technical Barriers to Trade (CTBT)
have identified and tabled a considerable number of issues relating to labels. In particular, WTO members
adopted the Doha Declaration in November 2001 where they “instructed the CTE, in pursuing work on all
items on its agenda within its current terms of reference, to give particular attention to… (iii) labeling
requirements for environmental purposes” (Paragraph 32 of the Declaration). Although Doha negotiations
have yet to find breakthrough over the key issues, it is expected that WTO members would agree at least
on procedural rules governing labeling schemes so as to ensure that labels do not become trade restricting
while continuing to better inform consumers and assist environmental goods producers in extracting a
‘green’ premium.

49. Apart from work in the WTO forum, there are two possible options to lessen the trade-related
concerns arising from environmental and social labeling schemes. One is to harmonise standards, to which
the GEN has attached priority. The other solution is to promote mutual recognition agreements (MRAs)
between the schemes. In many cases, national labeling schemes have already concluded MRAs. The
harmonisation and the conclusion of MRAs are expected to be further spurred by market forces.

Consumers and labels

50. It is generally accepted that consumers are interested in the social and environmental conditions
under which their purchases are produced. To what extent do consumers prefer socially and/or
environmentally labeled products to non-labeled ones? According to a study by the UK-based Social
Market Foundation, “Race to the Top: how government, business and consumers can drive CSR”, 64% of
respondents taking part in a survey wanted clearer labeling so that they could judge how responsible the
products are (SMF, 2003). However, work by Sedjo and Swallow (2002) shows that a willingness to pay a
premium by a portion of consumers does not ensure that a premium will be forthcoming in the market. In
fact, according to a survey and experiment carried out by the Wood Science & Engineering of Oregon
State University, 183 respondents out of 299 total surveyed (61%) were willing to pay at least a 5%
premium, but its experiment revealed that 102 people out of 279 (58%) actually paid a 2% premium
(Anderson, 2003).

51. Loureiro, McCluskey and Mittelhammer (2002) argue that the more importance consumers
attached to food safety and the environment, the more they were willing to pay for apples with an eco-
label. Similar results were obtained by a study by Dickson (2001) using a fictitious “no sweat” label. In a
European setting, De Pelsmacker, Driesen and Rayp (2005) showed that people who regarded themselves
as idealistic and unconventional were willing to pay more for coffee carrying a “fair trade” label, while
Verhoef (2005) showed that people who cared about animal welfare were more likely to buy “organic”
meat. Together, these results suggest that consumers have at least some confidence that the labels actually
represent what they claim to represent. Similarly, consumer surveys in the UNITED KINGDOM showed
that consumers generally had favourable beliefs regarding such organic meat (Brennan, Gallagher and
McEachern, 2003).

52. However, the plethora of labeling schemes together with their similarity in some cases have
resulted in consumer confusion. In his market study of coffee, Giovannucci (2003) found that consumer
confusion was indeed a problem, especially in European markets with a large number of labeling schemes
and similar initiatives. This is not only a problem for consumers but also for suppliers who pay for
certification. To avoid consume confusion, the WWF-Norway has urged that there be fewer eco-labels with
strong support from environmental organisations, industry and governments (Hansson, 2005).

Business views on standards and labels

19
53. Although it is difficult to generalise business views on eco-labelling, many businesses seem to be
unenthusiastic. Some companies have supported labelling schemes in principle but also cautioned that
labels might work as a barrier to trade. For instance, while the International Chamber of Commerce
adopted a resolution in 1990 which recognised the eco-label as a suitable instrument in sustainable
development, it also expressed concern that environmental labels could be used as trade barriers. The EU
scheme has come under criticism from the Confederation of British Industry, who has pointed out
numerous problems and a lack of credibility with manufacturers, retailers and consumers because of
haphazard product selection procedure, the high cost of applying for and slow process of awarding an eco-
label (CBI, 1998).

54. Procter & Gamble reckons that many in industry have expressed concern that government-
sponsored Type I seal-of-approval eco-label programmes6 have not fulfilled the goal of either informing
consumers or encouraging environmental progress. The company lists the following industry concerns
(P&G, 2005):

• The criteria used to select eligible products are often not based on scientific knowledge, but rather
on political compromises.
• Type I eco-label criteria can create barriers to innovation, because they are based on an evaluation
of products that exits in the market place today.
• Type I eco-labels provide only relatively little factual information to consumers beyond expressing
a preference for one product for another.
• Government-sponsored programme, even when voluntary, have the potential to create trade
barriers, especially when criteria are related to how a product is made.

c) Strength and weakness of labelling schemes for an information tool

55. The main strength of labelling schemes lies in their visibility and simplicity.7 Particularly for
consumer goods, they are useful and effective way of communicating product attributes that meet
consumers‘ social and environmental preferences. Labels can appeal especially to consumers that have no
time to search for information about attributes of goods and services that are not readily visible. From a
more general perspective, eco-labels remain one of the most widely accepted ways for a company to
communicate environmental credentials (UNEP, 2005). Labels can be credible when they are accompanied
by reliable standards and certification systems. Some international schemes have achieved a high level of
trust and recognition internationally. All in all, the number of companies/licenses which have joined
national eco-label initiatives to date indicates that a growing number of companies are willing to take
advantage of labelling schemes to provide product information for consumers.

56. Labelling schemes as information tools also have some weaknesses. Foremost, they are available
only for a limited number of consumer goods and are not easily adopted for intermediate goods. Still
labelled CSR products typically represent niche markets accounting often for no more than 2% of
consumption of the relevant category of products. While the growing number of labelling schemes signals
that the range of sectors where labelling occurs is broadening, the multiplication of labels likely will result
in consumer confusion and possibly erosion of credibility. Moreover, experience over time with eco-
labelling shows that labelling can be subject to fraud and misrepresentation. Overall, the success of

6 As defined by ISO, Type I is a third-party eco-label.

7 However, there is a counter-argument that simplicity do not benefit. Roe, Teisl, Rong and Levy (2001)
compared the effectiveness of labels with more detailed, quantified product information on environmental
attributes in an experimental setting. Their results suggest that detailed information disclosure is more
effective than third-party certification in producing consumer confidence in the information provided to
them.

20
labelling schemes critically depends on both consumer awareness and business acceptance. While
consumer awareness has risen substantially over the last decade, business acceptance has lagged behind.
This is in part because certification and licensing entail costs for companies. There have been complaints,
for example, that FLO and MSC fees are burdensome for poor producers in developing countries.

2. Consumer guides

a) Consumer guides and CSR

57. To help consumer choice, thousands of consumer guides offer product information, including
prices, specifications, features, reviews, results of testing and comparisons. Some have a long tradition,
dating back to the mid-1930s in the United States, when the Consumers Union started publishing its
regular reports on food and clothing items. Nowadays, the Consumer Reports magazine claims a
readership of 4 million (one of the top ten paid-circulation magazines in the United States) and also serves
the public through newsletters, websites and radio and television programmes. Annex III.3 provides
examples of internet-based consumer guides. Above all, the likes of Consumer Reports and BestBuy have
accumulated a stock of trustworthiness with the general public that is perceived as a natural counterweight
to the overwhelming and at times misleading presence of corporate advertising. 8 Research on buying
behaviour suggests that buying guides published by consumer organisations or other public and private
entities perform an important role in the overall buying process.9

58. More recently, buying guides and consumer information magazines began to cover CSR issues,
ranking products and companies around the planet, from small independents to large multinationals. This is
the case of Which? in the United Kingdom, 10 Öko-Test in Germany, Konsument in Austria,
Consumentengids in the Netherlands, Test-Aankoop and Test achats in Belgium, 60 Millions de
consommateurs in France, Choice in Australia and ConsumerOnline in New Zealand. Many of them are
published by consumer organisations so that readership is tied to membership subscription. The circulation
of these lavishly-illustrated paper magazines is reported not only to hold steady but to continue to increase
slightly; however this may be a generational feature that will go away as younger consumers reach their
consumption peak.

59. In some guides and magazines, product recommendations are made based on environmental,
social, fair trade or ethical considerations. All of them offer a variety of printed and online materials. These
include Ethical Consumer and newconsumer in the United Kingdom, GreenerChoices and BuildingGreen
in the United States and Consumer in New Zealand, whose declared objective is to promote universal
human rights and environmental sustainability through ethical purchasing (see Box 1).

8 As a proof of their commitment to informing consumers at their level, in 1980 Consumer Reports launched
Penny Power magazine, later Zillions: Consumer Reports for Kids, now the online-only service Consumer
Reports Online 4 Kids. In 1990 the Consumer Reports Education Department released a landmark study on
commercial pressures on children, warning that “the barrage of advertising encourages continuous
consumption and acquisition at the expense of reasoned decision-making, thrift, and environmental
sensitivity”.
9 Although a majority of consumers prefers to seek the information they need on the Internet, it is through
television and newspapers that they normally get it (Steedman, 2005).
10 As well as its satellites Which? Extra, Holiday Which? Gardening Which?, Computing Which?, Which?
Books, Which? Good Food Guide, Drug and Therapeutics Bulletin, Treatment Notes and Consumer Policy
Review. Similar specialized publications exist in other countries. And still, only 2% of consumers in the
United Kingdom reportedly say they have enough information to judge the ethical position of companies
(Smith, 2003).

21
 Box 1: Example of a consumer guide - Ethical Consumer
A typical Ethical Consumer report will take from two to eight pages, packed with information and illustrated with
boxes, graphs, tables and photographs, designed to highlight product features, competing brands, corporate profiles,
stories about campaigns against brands or companies. It will include useful links to obtain further information, like
books, online advisory services, consumer associations and public authorities in charge of consumer protection
(http://www.ethicalconsumer.org/online.htm).
The rankings it publishes are the overall scores given to manufacturers, distributors and retailers, and are based on
the quality social and environmental reporting, presence in countries with “oppressive regimes” and tax havens, and
corporate policies. Depending on the product, space is dedicated to questions of forced and child labour, fair trade and
codes of conducts, and business practices in contentious areas, like irresponsible marketing, instances of human rights
violations, contributions to political campaigns and involvement in environmental mishandlings. The related ethiscore
online service calculates an ‘ethical score' for a wide range of consumer products and services based on a company's
rating in each of Ethical Consumer's 20 main ethical categories, including environmental reporting, pollution, nuclear
power involvement, boycott calls, genetic engineering and fair trade, among others.
The information provided comes from producers, retailers, consumers, NGOs, financial and auditing services
providers, and clearing by legal experts. Ethical Consumer sells 7000 copies, mostly to subscribers.

60. They usually inform in detail on the producer’s environmental reporting, sustainable farming,
forced and child labour record, its code of conduct, irresponsible marketing, genetic engineering, and the
like, further supplying references to specialised watchdogs like Corporate Critic, Fair Trade Foundation
and Anti-Slavery International in the United Kingdom, Corporate Europe Observatory in the Netherlands
or CorpWatch in the United States. The social responsibility (and irresponsibility) of firms is listed and
analysed in numerous sustainability indexes and NGO rankings.

61. Many consumer organisations are members of Consumers International (CI), a private
international coalition representing 234 public and private consumer organisations in 113 countries and
promoting “the right [of consumers] to have the facts needed to make an informed choice worldwide” by
encouraging “high standards of corporate responsibility” and supporting “sustainable consumption and
production practices”, including through the organisation of international campaigns.

b) Market impact

62. Consumer guides normally use consumer-friendly language, deal with issues that people care
about, or can relate to, provide expert guidance and raise public awareness. Information cannot substitute
for the practical skills and competencies required to engage in public debate –the realm of NGO
advocation– but it can lead to sound purchasing decision-making by the lay customer.

63. Some experimental studies have investigated the influence of CSR information provided through
a consumer guide type of format on consumers’ attitudes and preferences. Brown and Dacin (1997)
provided information on a (fictitious) company using a “company report card” which was ostensibly
prepared by “impartial industry experts”. They found that the positive information regarding philanthropy
and community involvement provided in this way increased respondents’ ratings of the company’s CSR, as
well as their attitude towards the company and its product. Madrigal (2000) replicated this result for
environmentally friendly production. Mohr and Webb (2005) showed that information on environmentally
friendly production, presented in this way, also impacted consumer purchase intentions. A comparison of
the effectiveness of CSR information ostensibly provided through a consumer association and CSR
information provided through a company website found that attitudes towards the company and its
products as well as purchase intentions were significantly higher when the consumer organisation was the
source (Swaen and Vanhamme, 2005).

22
64. When consumers were interviewed in a more naturalistic setting regarding their information
preferences with respect to CSR, many consumers thought that ratings available through the Internet would
be particularly suitable (Mohr, Webb and Harris, 2001). On the other hand, although subscribers to Ethical
Consumer trusted the magazine as a source of information on labour and environmental conditions, they
often felt overwhelmed by the information, feeling unable to incorporate all the information into their
purchase decisions (Shaw and Clarke, 1999).

65. Whether buying guides and consumer information magazines are of use to consumers more in a
negative rather than positive sense, that is, to what extent they serve as catalysts for boycotts rather than
buying trends, is not clear. According to GlobeScan’s CSR Monitor, a survey of 20,000 consumers in
20 countries published in 2002, 42% of respondents in North America and 25% in Europe reported not
buying the products of companies whose social and environmental performance is perceived to be poor.
What is clear is that consumers do respond to information on CSR, that is offered in a systematic and
comparable way. Consumer guides are at the frontline of such efforts.

66. Moreover, as the Internet has facilitated information delivery –improved public access and
unlimited quantity of information– but at the cost of diluting its reliability, now more than ever impartial,
reputed intermediate sources that collect, compare, analyse, explain and disseminate raw and scattered
information for ready use by consumers, can play a critical role in such decision-making process and in
allaying uneasiness on industry-led production standards that can impact on public policy in general and
environmental- and labour-sensitive production in particular (O’Rourke, 2004; Smith, 2006).

3. CSR reporting

a) Development of reporting

67. Responding to increasing demand for disclosure of their social and environmental performance, a
growing number of companies annually or periodically publish reports covering activities related to CSR,
which are also accessible on their websites in varying formats.11 This is a relatively recent phenomenon as
the first environmental report dates back to 1989 when Ben & Jerry's Homemade Ice Cream commissioned
the first one in the United States, separate from their financial statements, until when non-financial
reporting largely focused on occupational health and safety.12

68. Systematic and standardised social and environmental reporting originated in the expansion of
traditional financial reporting requirements to account for contingent liabilities, obligations and risks that
might have a material impact on profits and the long-term shareholder value of publicly traded companies,
a vigorous trend that is evident in the filing requirements of the U.S. Securities and Exchange Commission
or the Financial Services Authority of the United Kingdom, for example.

69. In line with a growing trend of CSR reporting, there have appeared several voluntary initiatives
which provide guidelines or standards relating to procedure and contents of reporting. The Global
Reporting Initiative (GRI), the most comprehensive as such, is a multi-stakeholder process and
independent institution established by a partnership between leading environmental groups, institutional
investors in the United States, the United Nations Environment Programme (UNEP), NGOs, accounting

11 A thorough analysis on how to maximize impact through Internet reporting (format, medium, search
engines, hyperlinks, updates, forums and bulletin boards, video and audio clips, feedback, online ordering,
etc.) is provided by the Association of Chartered Certified Accountants’ Environmental, social and
sustainability reporting on the World Wide Web (2001).
12 Kolk (2004) argues that there was the “first wave” of reporting related to social and environmental aspects
of business in the 1970s, yet its momentum did not last in the 1980s.

23
firms, business associations and other stakeholders in 1997.13 The GRI offers the Sustainability Reporting
Guidelines which aim at providing globally applicable guidelines for reporting on economic,
environmental, and social performance, initially for corporations and eventually for any business,
government agency or NGO. Although the GRI does not verify individual reports, they encourage
organisations that have produced reports to inform and register their reports in the GRI reports database.
The GRI process is still on going, developing sector-specific supplements and revising the existing
guidelines consolidating itself as the leading international standard for ‘triple bottom line’ reporting (G3).14

70. A requirement for CSR reporting has found its way into national legislation in several countries.
With the Nouvelles régulations économiques of May 2001, France became the first country to mandate
triple bottom reporting for publicly listed companies, including labour standards and environmental
consequences of their activities. Around 300 Dutch companies are required to report to the government and
the public on their environmental performance and, after extensive stakeholder consultations, the Dutch
Reporting Guidelines were released in 2003. The Belgian government led the way in adopting the world’s
first social reporting and labelling law in January 2002.

b) CSR reporting trend

71. Several sources attest that the trend of CSR reporting has been growing. The Financial Times
reported in 2003 that more than half of the top 250 companies now produce reports on environmental,
social and ethical performance.15 The GRI estimates that more than 3,000 CSR reports have been published
voluntarily, and as of April 2006, the GRI database itself documents reportings from 831 organisations
(mainly companies). KPMG Global Sustainability Services’ assessments on the performance of the top
companies of leading countries, that are published every three years since 1993, show a clear increase in
reporting from 12% in 1993 to 28% in 2002 in 16 countries, with Japan, the United Kingdom, the United
States, the Netherlands, Finland and Germany reaching well above 30%.

72. Corporate codes of conduct, which serve as basic institutional indications of commitment to
corporate responsibility, have mushroomed among OECD companies during the last decade and are
common also among emerging market companies (e.g. OECD, 2001; OECD, 2005). Many of these
documents contains general declarations of ethical purposes with weak implementation methods and no
statutory or regulatory enforceability. Much has changed in the last few years, as this proliferation has
prompted some NGOs, international organisations and governments to pool resources and develop
streamlined reporting, measuring and auditing standards that reflect real-life situations rather than merely
aspirational goals.

73. In 2005, 52% of the Global 250, the top half of Fortune 500 corporations, and 33% of the
National 100 companies, the top 100 companies in 16 countries, issued separate CSR reports (Kolk 2004,
KPMG 2005). These are mostly large multinationals reputed as leaders in CSR performance. The CSR

13 Other than the GRI guidelines, the AA 1000 Accountability Standard (AA1000) and ISO 14063 include
elements on reportings in part. AA1000 framework and specialized modules are considered the foremost
assurance standard for social and sustainability reporting. However, some criticize the “impenetrable
assurance language” and “the fact that they often appear to be reporting to management” rather than to the
universe of stakeholders (http://www.accountability.org.uk/aa1000/default.aspn). In 2004, the ISO began
the process to develop the Guidance on Social Responsibility (ISO 26000) including a guidance standard
for CSR reporting, due for completion by 2008.
14 G3 is due for release in October 2006, and at the time of this writing GRI is eliciting comments from 285
organizational stakeholders in 39 countries and the public in general about them.
(http://www.globalreporting.org/index.asp)
15 “Half top companies report on environment conduct” (Financial Times 09/09/2003)

24
Network 2003 Benchmark Survey Report16 corroborated these findings, including huge differences from
industry to industry (led by financial services, electronics and automotives) and geography to geography
(led by Japan, the United Kingdom and Canada). At the industry level, more than 80% out of top 250
companies of the Fortune 500 are reporting in electronics & computers, utilities, automotive and oil & gas
sectors and most remarkable is the financial sector which show more than a two-fold increase in reporting
since 2002 (KPMG, 2005).

74. The current reports cover a wide range of issues on the CSR agenda. A clear tendency is that
environmental reporting has broadened to an inclusion of social and sometimes also financial issues (Kolk,
2005). The common topics included in reports are: corporate governance, environmental performance,
health and safety of employees, community contribution, supply chain, etc. The KPMG survey revealed
that report content is most commonly decided based on GRI guidelines (40%), with only a fifth (21%)
mentioning stakeholder consultation. (See Annex III.4 for some examples of CSR reporting).

c) Different views on reporting

75. Nowadays, information about production methods, whether related to financial-, social- or
environmental conditions, may be deemed a public good. The public’s right to know is at the centre of a
wave of transparency that redounds in enhanced benefits to consumers and investors. These benefits accrue
directly, by helping consumers make informed decisions, and indirectly, by facilitating the work of market
analysts and government supervisors who make their findings public. For instance, environmental
disclosure on air, water and land pollution, known as pollutant release and transfer registers (PRTRs), are
mandatory in all OECD countries and numerous non-OECD countries. Results from a survey conducted in
the UNITED KINGDOM show that there is a strong majority of respondents in favour of compulsory
reporting at least for companies above a certain size.17

76. Also, many consumers in OECD are familiar with reports. About half of the respondents from
North America, Australia and some parts of Europe participating in a recent survey stated that they had
either read or at least briefly looked at a CSR report themselves, or heard about one from some else
(GlobeScan, 2004).18

77. It is claimed that CSR reporting benefits business in several ways. Foremost, reports help
enhance stakeholder relations and credibility by meeting rising expectation for disclosure and transparency.
It also protects and improves the brand image of company, dismissing possible negative campaign and
upgrading the company image. Companies may use reporting as internal communications, educating and
motivating employees. In responding to a growing demand for socially responsible investment, reporting
provides for better accessibility to capital market. Indeed, Roe et al. (2001) investigated the effectiveness
of detailed company disclosures regarding environmental attributes in an experimental setting. Their
results suggest that disclosure by companies is more effective than third-party certification in producing
consumer confidence in the information provided to them, and in attracting consumers to environmentally
friendly companies.

78. However, CSR reporting is not welcome by all businesses. Many companies complain that it is
unrealistically demanding, costly and not very useful to stakeholders when they have to provide

16 See http://www.csrnetwork.com/.
17 “What do stakeholders think of company CSR reports?” (BITC, 11/12/03,
http://www.bitc.org.uk/about_bitc/index.html).
18 These data come from the GlobeScan 2004 Corporate Social Responsibility Monitor survey involving
interviews with 1,000 respondents in each of 21 countries, between December 2003 and February 2004.

25
information on 50 core indicators as well as those contained in sector supplements. Both Gap and Nike, for
example, have stated that the current emphasis on social auditing is no longer sustainable and needs to be
replaced by a system of constant management-workers review of working practices at the factory level.
The Intergovernmental Working Group of Experts on International Standards of Accounting and Reporting
(ISAR), which is serviced by the United Nations Conference on Trade and Development (UNCTAD) in
Geneva, has acknowledged these claims and proposed a more limited number of 17 core indicators.19

4. CSR communication through marketing strategy

79. Other than labels, reports, and consumer magazines, companies use many different tools and
channels to communicate about their social responsibility activities and records. Overall they have what we
consider traditional marketing tools, like advertising or public relation and what we consider untraditional
marketing tools, like off-media communication and Web based marketing for example. What channel, or
what tools they use for their marketing mix20 depends on their overall strategy, the positioning of their
product or the sector they operate in.

80. In terms of CSR communication, companies tend to use untraditional marketing in a greater
proportion in their mix than traditional marketing. This can be explained by the fact that overt
advertisement from the part of a company is usually perceived by the consumers as an untrustworthy
source, and leaves the consumer feeling sceptical about a brand. The image of a product can suffer from
this scepticism.

81. Reputation is a company’s key asset. At a time when trust in business remains low, real
commitment and performance matter most, and only substance sells. Aligning actions and words is
essential to reconciling public relations (PR), advertisement and corporate social responsibility in a
positive way, whether in safeguarding corporate reputations or advancing corporate responsibility goals.

82. For companies willing to strengthen their brand image thanks to social or environmental issues,
showing evidence of internal alignment through a mix of non-financial reporting, public relations,
awareness campaigns, rather than relying mostly on corporate communication and advertising, will help
build consumers’ trust. Materialising evidence, through products and connection to consumers’ lifes, as
well as making the reporting transparent to avoid “greenwashing” 21 suspicion are important to then
maintain this trust.

a) Traditional marketing

83. Traditional marketing is what we usually think of when thinking about corporate communication:
it refers to advertising on TV, on a radio station, on a billboard and in a magazine; it refers to the PR

19 With respect to consumers ISAR (2005a, http://www.unctad.org/isar) has noted that they “are interested in
information on product safety measures, the effect of products on health, product quality, product liability
and warranty, new product development and the product manufacturing process. Regarding the latter, they
want information about the circumstances in which products are produced (e.g., working conditions). This
group is not limited to present and future customers; it also includes former customers, who are interested
in product liability and product warranty issues arising from past purchases”.
20 The marketing mix is a crafting and implementing of a marketing strategy. It stresses the "mixing" of
various tools and channels in such a way that both organizational and consumer (target markets) objectives
are attained.
21 Term that environmentalists and other critics give to the activity of giving a positive public image to
putatively environmentally unsound practices. The term arose in the aftermath of the Earth Summit held in
Rio de Janeiro in June 1992.

26
campaigns, press conferences and press releases, and is also about the marketing work behind a packaging
design or a company magazine. It also refers to different marketing strategies, like Cause Related
Marketing22 (CRM) which is the most relevant to CSR.

84. Advertising CSR overtly is risky. To build publicity on CSR brings with it the risk of confusing
the consumer about the message of the advertiser. Qualification such as “respects human rights” for
example, is vague and might confuse the consumers and therefore render them distrustful, if they perceive
the advertisement as being uninformative and dishonest. Sophisticated CSR positioning is difficult to
convey with this traditional marketing tool. Also, brands must be careful when claiming to be acting
ethically. French retailer Carrefour, for instance, has been criticised for using an ethical proposition to
attract customers without backing its claim, resulting in consumer mistrust. Companies can do more
damage than good by stating their environmental or social concern without backing them up. A survey
from Ethical Corp found that in general, 70% of people say they don’t trust advertising and PR.

85. Some experimental research has demonstrated the importance of “backing up” advertising claims.
Davis (1994b) showed that specific advertising claims regarding environmental product attributes (like
“100% biodegradable”) lead to more favourable perceptions of the company’s commitment to the
environment than general claims (like “Earth friendly”), and also to more favourable product evaluations
and purchase intentions. Similarly, Berens (2004) found that a corporate advertisement highlighting
specific environmental actions and performance was perceived as significantly more credible and
diagnostic for the company’s CSR than an ad discussing only general principles and values. These results
are also consistent with anecdotal evidence such as the high effectiveness of Chevron’s “People do”
campaign, which focused on very concrete environmental actions like constructing wooden platforms
above electricity wires to protect eagles (Winters, 1988).

86. The context in which an ad is published may be also an important aspect determining whether it
is effective or not. Keller and Aaker (1998) found that corporate ads describing a company’s environmental
or community-oriented actions enhanced consumer attitudes and purchase intentions much more when the
product was also positioned as environmentally friendly or as helping the community.

87. When price and quality are equal, 81% of consumers are more likely to buy a product associated
with a cause (UNEP, 2005). Moreover, an ethical stance is seen as fundamental rather than auxiliary to a
brand’s equity as consumers have come to expect more from companies, including more social
responsibility. As a matter of fact, consumer knowledge and power is driving the move towards Cause
Related Marketing (CRM). (See Box 2 for an example of such a campaign). With a large product array to
choose from, product differentiation is becoming more than ever vital to a company’s expansion and
survival. CRM is a useful tool to gain and maintain consumers’ affinity to the brand. US Sponsorship
spending on cause marketing will hit USD1.34 billion in 2006, according to the IEG Sponsorship Report,
Chicago.23

88. A large number of studies have been devoted to consumer reactions to this type of
communication. Many studies have investigated the role of the fit or similarity between the cause that
benefits from the marketing campaign and the company’s core activities. For example, Ellen, Webb and
Mohr (2006) found that when the cause fits well with the company’s core activities, this leads to more
favourable attributions regarding the company’s motives for the campaign, and to higher purchase
intentions. The positive roles of fit and perceived motives have been established by numerous other studies

22 “A strategic positioning and marketing tool that links a company or brand to a relevant social cause or
issue, for mutual benefit.” From “Brand Spirit, How Cause Related Marketing Builds Brands” by Hamish
Pringle and Marjorie Thompson, Wiley, 1999
23 See www.causemarketingforum.com.

27
(e.g., Barone, Miyazaki and Taylor, 2000; Becker-Olsen, Cudmore and Hill, 2006; Pracejus and Olsen,
2004). Interestingly, results show that “self-serving” motives like image enhancement and generating sales
are not necessarily perceived as bad, as long as they are not too blatantly egoistic. In fact, it may be best
when consumers attribute both self-serving and other-serving motives to the company (Ellen, Webb and
Mohr, 2006). In addition, studies have shown that the quality and price of the product are important in
influencing consumer attitudes and intentions towards cause-related marketing (Barone, Miyazaki and
Taylor, 2000). Finally, some results suggest that companies who have a “neutral” reputation benefit more
from a cause marketing campaign than companies with a very good or a very bad reputation (Lichtenstein,
Drumwright and Braig, 2004; Strahilevitz, 2003).

Box 2: Ben and Jerry’s and the Family Farmer - CRM

In 2005 Ben and Jerry’s launched a campaign to fight for small family farms. In a TV advertisement in the USA, they
stressed that America loses over 330 farms every week, and the spot ends by saying “join our fight for small family
farms”. Ben and Jerry’s stressing that the milk with which they make their ice cream comes from small family farms.
Ben and Jerry’s won 8th place in the best advertisement campaign of ThirdWay “Most Effective Advertising” Awards
2005 with “The Family Farmer” campaign - Ben & Jerry’s (http://www.benjerry.com/familyfarms/ to see the
campaign). As can be read on the Thirdway web site: the reason for the award: “Cause-based advertising is
notoriously difficult to get right. Some brands with strong affiliations to causes get little credit for their efforts. Other
brands are so heavy-handed with their self-promotion that they damage their image. Unilever and McKinney & Silver
have combined efforts to make Ben & Jerry’s look and feel small again by promoting the Campaign for the Family
Farmer. It is a socially and politically astute choice that leaves little room for disagreement. By focusing on the cause
and using the Ben & Jerry’s name as an endorsement of the cause and to ask for support, Unilever brilliantly
capitalises on the full affiliation value of the campaign.”
Source: http://www.thirdwayblog.com/?cat=41)

89. Certain companies owning different brands (Unilever, for example) have decided to publish
magazines for their consumers, informing them about their brands, their communication schemes
(environmental sponsoring, or NGO partnership of a brand, for instance), or newly published CSR reports.
An example of this is the Dutch company Ahold. Their magazine, AllerHande, is freely available in Ahold
stores, as well as on the web, and contains information about their products in the midst of recipes and
lifestyle articles. Unilever also has such a magazine called Pour tout vous dire.

90. As a general rule though, only big corporation can afford these expensive quadric-colour,
multiple pages printouts. Since they have many different brands though, some respecting CSR
(environmentally friendly, locally produced and therefore respecting local labour laws) and other not
emphasising this, and perhaps even not respecting CSR, or not completely, these magazines are not the
best way for these companies to communicate about CSR. CSR issues remain therefore pretty rare in those
magazines, and they are not the media of choice for brands to communicate their CSR stance.

91. Packaging is also an important part of visual marketing, as it reaches the consumer just when he
or she is prepared to buy the product in the isle of the supermarket, for example. It can convey a message
about a particular brand, a producer’s CSR stance, the naturality or environmental friendliness of the
product and is also a media to display self-declared CSR labels or awards earned by the product (best
product of the year etc).

92. Much research has been devoted to consumer perceptions of environmental claims on product
packaging. Several opinion polls in the US have suggested that a substantial number of consumers are
sceptical of environmental product claims (MayerScammon and Zick, 1993). However, Mayer, Scammon
and Zick (1993) found that this scepticism does not seem to be related to the amount of exposure to the
claims, suggesting that it is more a function of general scepticism regarding marketing claims than of the

28
environmental claims by themselves. Indeed, Mohr, Eroglu and Ellen (1998) found that consumer
scepticism towards environmental claims is strongly related to their general scepticism towards marketing,
but not to their degree of knowledge regarding environmental claims. Finally, Roe et al (2001) found that
while adding more “objective” information to environmental claims, such as seals of approval or
quantitative information on environmental attributes, improved consumer perceptions of the usefulness of
the information, it did not always influence consumer preferences. Particularly when objective differences
between competitors were large, product claims by themselves were sufficiently convincing. These
findings suggest that while consumers are critical of environmental claims, they do not necessarily
discount all environmental claims they encounter. However, research has also shown that when consumers
do feel that an environmental claim is misleading, this is likely to lead to a decrease in their evaluations of
the product and their purchase intentions (Newell, Goldsmith and Banzhaf, 1998).

93. Which factors, then, determine the credibility of CSR-related claims on product packaging? As in
the case of advertising, one factor may be how specific the claims are. Maronick and Andrews (1999)
found that when general packaging claims (e.g. “ozone friendly”) were coupled with specific qualifiers (e.g.
“no CFCs”) this lead consumers to perceive a product as safer for the environment than when either only a
general claim or only a specific claim was presented. While general claims may be perceived as obscure
because they cannot be verified (as is suggested by research in advertising), specific claims may be hard to
interpret by themselves. When used together, they may compensate each other’s weaknesses and increase
consumer trust.

b) Untraditional marketing

94. Untraditional Marketing includes techniques which have been developed recently as a way to
move away from the lack of trust which consumers have in traditional communication techniques.
Therefore, untraditional marketing tries to market a brand or product without being perceived as doing so
by the consumer.

95. Undercover communication, or off-media communication, is considered to be the art of

communicating with the consumer outside of traditional advertising spaces (radio, TV, press and billboards)
without the commercial nature of the contact being noticed. This gives an opportunity for the brand to
acquire a positive image and gain trust, withholding the aggressive image of traditional marketing. When
axed around CSR, off-media communication is under the cover of informing people about social or
environmental issues. It can be achieved through sponsoring, public relations but also conference
participation or organising, printing and distributing CSR related brochures, street communication, online
advertising games, and so on.

96. Some studies have examined how consumers react to such publicity efforts. For example, Belch
and Belch (1987) examined reactions of boycotters and non-boycotters of Coors to a television
documentary showing the company in a positive light with respect to labour issues. Their findings suggest
that the attitudes of both groups towards the company became stronger after viewing the documentary.24
More recently, Sen, Bhattacharya and Korschun (2006) investigated the influence of publicity in the local
news media regarding a company’s campaign to support the local community. Their results showed that
people who were actually aware of the campaign were more likely to believe that the company is socially
responsible, had more favourable attitudes toward the company, and were more willing to buy the
company’s products, than people who were not aware of the campaign. However, even though it was
highlighted extensively in the local media, only 17% of their sample was actually aware of the campaign.

24 Unfortunately, it is not clear from the paper whether attitudes also became more favourable.

29
97. Similarly, in an experimental setting Murray and Vogel (1997) found that a (fictitious)
company’s positive CSR actions regarding its employees (child care facilities), the environment, and
communities, as communicated through a newspaper article, positively influenced consumer evaluations of
the company’s concern for employees, communities and the environment. In addition, the information
positively affected consumer purchase intentions. However, consumers may also be sceptical of publicity,
sometimes taking it to be “merely” PR (Mohr, Webb and Harris, 2001). Like corporate advertising,
generating publicity regarding CSR may even have adverse effects in some cases. Swaen and Vanhamme
(2004) showed in an experiment that the perceived integrity of a company after negative information
regarding CSR was lower when the company had earlier emphasised its positive CSR actions through a
press release than when it had not emphasised such actions. This result is consistent with that of Pashupati,
Arpan and Nikolaev (2002) and Davis (1994a) in a corporate advertising context.

98. One of undercover techniques is called Guerilla marketing 25 . Guerrilla techniques include
activist online, on pack and in-store campaign. These campaigns are in many cases coupled with cause-
related marketing. Stores can constitute a cornerstone to this marketing approach: choosing to build one’s
own store to avoid retailer dependency and increasing the possibility of making information available to
consumers, through leaflets, posters, and specific employee training programmes.

99. Reporting in electronic format can be a form of undercover or guerrilla marketing, and it is
becoming increasingly commonplace. Electronic media include email, CD-Rom, and the Website.
Electronic media and especially the Websites, offer the potential to improve public access to information
on a company’s doing, and to offer an unlimited quantity of information, allowing the user to download as
much information as they want.

100. Web-based communication may include forum and bulletin boards (example: the “Tell Shell”
site) where a dialogue is created between the company and consumers, or stakeholders. It acts as a form of
public consultation process, emphasising transparency, a key element of CSR marketing. Other sites have
feedback forms, like the online Volvo report, that can be completed in minutes and responses are sent to a
data file that can be later analysed. This form of communication tool provides valuable information about
the company stakeholders. Some companies also choose to sponsor a non-profit web page, having their
advertising banner linked directly to their CSR report.

101. In a study, Swaen and Vanhamme (2005) found that communicating positive CSR through a
company website enhanced product evaluations and purchase intentions in the face of negative publicity.
This finding is consistent with results of Klein and Dawar (2004), who showed that positive CSR
information protected a company’s image against negative publicity about the quality of its products.
However, this protective effect may exist especially when a company has demonstrated its CSR activities
over a relatively long time period (Pashupati et al, 2002).

102. Implementing CRM efforts at a local level can also reap huge rewards for brand equity.
Consumers want to see the benefits of a campaign locally and also tend to trust brands that are close to
them. Through micro events, multinational companies shift their image. Companies may sponsor a local
organic market, a fair, a cause concert, etc. An example of a marketing mix is provided in Box 3.

25 Guerrilla marketing, as described by Jay Conrad Levinson in his popular 1982 book Guerrilla Marketing,
is an unconventional way of performing promotional activities on a very low budget. Such promotions are
sometimes designed so that the target audience is left unaware they have been marketed to and may
therefore be a form of undercover marketing (Wikipedia).

30
 Box 3: An example of Marketing mix: Coca-Cola and Machu Picchu
An example of Guerilla, local level and then web based marketing mix from the coca-cola web site: “At Peru's
famous Machu Picchu archaeological site, we organised an aggressive clean-up campaign, Campaña de Limpieza de
Machu-Picchu, with the Machu Picchu Sanctuary Authority. The programme systematically removes trash that
constantly threatens the site - including PET bottles discarded by tourists, which are then recycled. The effort has
collected more than 20 tons of garbage and has been highly praised by local authorities.”
Source: http://www2.coca-cola.com/citizenship/waste.html

103. Buying Socially Responsible reputed brands with the expectation of a ripple effect on the rest
of the company’s brands is also a way to publicise one’s CSR. For instance, when L’Oreal buys The Body
Shop, traditionally renowned as being a SR corporation, this is relayed in the news and communicates to
the consumer that L’Oreal is concerned with CSR, and that the Body Shop’s good social and environmental
“behaviour” might have an impact on other L’Oreal brands.

104. However, although the public may get the perception of the multinational corporation trying to
become good thanks to the new company that it is buying, the “ethical consumer” gets the opposite
impression. In the case of The Body Shop, its Ethiscore (shown on the website of ethiscopre.org) dropped
as a result of its buyout from 11 to 2.5. The website of Ethical Consumer as well as other ethical or green
consumer guide sites have even called for a boycott of the company’s products.

105. Companies can include other stakeholders in their communication policies. For example, they
can partner with NGOs, which can enhance their reputation or can provide specialised expertise that they
do not have. For example, at Kellogg’s UK, CSR manager Bruce Learner insists that without the
specialised expertise of NGO partners, the company’s sponsored breakfast clubs and health promotion
programme couldn’t exist. Partnership with the Amateur Swimming Association, the Walking the Way to
Health Initiative, and ContinYou, a community education organisation, have made Kellogg’s sponsored
programmes credible, according to Learner. Also, their School Breakfast clubs, established with the help of
ContinYou, would be less efficient had company executives lacking in knowledge of the UK school
system attempted to set them up alone. According to Learner, working with NGOs has exposed him to
different organisational structures, experience of which has helped the company to be more inventive when
trying to find ways to serve customers (EC Newsdesk, 2006). NGOs in turn, benefit from the multinational
scope of the corporation, and huge marketing possibility, in monetary terms, that it offers.

106. Also, employees can be a brand or a company’s best ambassadors in terms of spreading the word.
Training them to convey a particular message about the brand to consumers can be a valuable
communication tool, especially when it comes to explaining complex CSR issues that cannot be conveyed
in simpler and shorter advertisement messages. Employee blogs26 have helped enhance the reputation of
their employers (for instance Microsoft, Sun Mircrosystem, or Stonefield Farms), and also have damaged it
(as for Google, Delta Air Lines, or Friendster). Blogs influence news, analysts, and regulators. This new
form of internal and external communication is not to be underestimated, as consumers may find valuable
and trustworthy (or perceived as) information about a company’s practices, production and product
information.

26 Blog (or weblog) is a website that is used in the manner of an online journal. Like other media, blogs often
focus on a particular subject, such as food, politics, or local news. Some blogs function as online diaries. A
typical blog combines text, images, and links to other blogs, web pages, and other media related to its topic.
Since its appearance in 1995, blogging has emerged as a popular means of communication, affecting public
opinion and mass media around the world (Wikipedia).

31
 Annex III.1: National and regional programmes in the OECD region

Standards/ Certified
Licenses issued
Country Programme delivered Criteria products/s
to companies
sets ervices
Australia Australian Ecolabel programme 24 26 280
Canada Environmental ChoiceM Program 160 230 >3,000
Czech Republic National Program of Labelling 39 72 176
Environmentally Products
EC European Eco-label (The Flower) 23 231 --
Germany The Blue Angel 86 571 3,359
Japan Eco-Mark programme 45 1756 5,074
Korea Environmental Labelling Program 102 448 1,765

New Zealand Environmental Choice New 23 13 207

Zealand
Spain AENOR-Medio Ambiente 13 52 275
Sweden Good Environmental Choice 13 223 786
Nordic Swan (including Nordic 59 ∼700 companies >3,000
countries) /1,067 licenses
Quality and Ecolabelling Program 10 67 2,302
(TCO)
United States Green Seal 43 99 493
Source: GEN Annual Report 2004

32
 Annex III.2: Selected standards and labelling schemes

Schemes Main features Logo

The Blue Angels ƒ First ecolabel initiative in the world
ƒ Launched by the German Federal Environment Ministry
in 1977
ƒ Coverage: grew from 45 products in 1979 to 86 products
in 2004
ƒ About 3,700 products and services from approximately
580 label users in Germany and abroad
ƒ 49% of Germans pay attention to the Blue Angel
European Eco- ƒ Set up by the Council Regulation (EEC) No. 880/92 of 23
label (the Flower) March 1992
ƒ Revised in 2000 to streamline the scheme
ƒ Part of a broader strategy aimed at promoting sustainable
consumption and production
ƒ 23 product groups covering 12 major areas of
manufacturing and one service activity
ƒ Holders: increased from only 33 companies in 1999 to
289 as of December 2005, textile-related business
accounts for 64 companies, the biggest in number,
followed by 50 paint and varnishes companies
Green Seal ƒ Established in 1989 and incorporated in 1990 as a non-
profit organisation
ƒ Issued its first environmental standard in 1992 and
completed the first product certifications in 1992
ƒ 493 products around forty categories were certified (as of
2004)
ƒ Items: household cleaners, paints, appliances, etc.
Marine ƒ Independent, global, non-profit organisation
Stewardship ƒ Established by Unilever and WWF in 1997
Council (MSC) ƒ Certification programme for well-managed fisheries
ƒ Fishery certification and chain-of-custody (CofC)
certification
ƒ MSC labelled products surged from 200 in 19 countries to
240 in 23 countries
IFOAM ƒ Founded in 1972 as an umbrella organisation for the
organic agricultural movement
ƒ Accreditation is administered by the independent
International Organic Accreditation Service (IOAS)
ƒ In 2004 the global market for organic products achieved
record growth, with IFOAM’s 700 members in 108
countries reaching a landmark value of USD25 billion
ISO 14000 Series ƒ First published in 1996 (ISO 14001:1996) but improved
again in 2004 (ISO 14001:2004)
ƒ Developed for sound environmental managements
ƒ ISO 14001 standard specifies requirements for an
environmental management system
ƒ By the end of 2004, 90956 certificates had been issued in
127 countries.

33
 FLO ƒ Started in the Netherlands in 1989
ƒ In 1997, 17 national initiatives together founded an
umbrella organisation, Fairtrade Labelling Organisation
(FLO)-International
ƒ FLO-certification is run by FLO-Cert Ltd
ƒ 531 producer organisations certified by FLO, representing
over one million farmers and workers over 50 countries
ƒ 667 registered traders consisting of exporters, importers,
processors and manufacturers
ƒ Between 2003 and 2004, the fair trade sales across the
world grew by 56% to over 125,000 Metric Tones (MT)
ƒ In the North America and the Pacific region alone, the
2004 retail value of Fair trade increased by 29% for a
total of USD376.42 million
Social ƒ Non-profit organisation dedicated to the development,
Accountability implementation and oversight of voluntary social
International standard.
(SAI) ƒ Factory-level management requirement involving all
stakeholders
ƒ 12 accredited certification bodies in 6 countries including
USA, UK and Italy
ƒ As per end-2005, 881 facilities of 57 industries were
certified around 50 countries
ƒ not a product label
Ethical Trading ƒ Set up 1998 as an initiative to ensure decent working
Initiative (ETI) conditions
ƒ UK alliance of companies, trade union and NGOs
ƒ Underpinned by the ETI Base Code and the
accompanying Principles of implementation
ƒ Become a member by making a public commitment to
adopt and implement the ETI Code
ƒ Membership: increased from 12 companies in 1998 to 37
at the end of 2004
Source: OECD

34
 Annex III.3: Consumer guides in the internet

Publication Country URL

http://www.consumerreports.org/cro/home.h
Consumer Reports US
tm
Consumer Reports Online
US http://www.zillions.org/
4 Kids
BestBuy US http://www.bestbuy.com/
http://www.eco-
GreenerChoices US
labels.org/greenconsumers/home.cfm
BuildingGreen US http://www.buildinggreen.com/
Corporate Critic UK http://www.corporatecritic.org/home.aspx
Which? UK http://www.which.net/
http://www.ethicalconsumer.org/,
Ethical Consumer UK
www.ethiscore.org
Newconsumer UK http://www.newconsumer.org/
Öko-Test Germany http://www.oekotest.de/
Konsument Austria http://www.konsument.at/konsument/
http://www.consumentenbond.nl/?ticket=nie
Consumentengids Netherlands
tlid
Test-Aankoop http://www.test-aankoop.be/
Belgium
Test achats http://www.test-achats.be/
60 Millions de
France http://www.60millions-mag.com/page
consommateurs
Choice Australia http://www.choice.com.au/
http://www.consumer.org.nz/Default.asp?bh
Consumer New Zealand
cp=1
The Green Book Singapore http://www.thegreenbook.com/
The Consumer Singapore http://www.case.org.sg/
Source: OECD

35
 Annex III.4: Good practice in CSR reporting: Some examples

Ford Motor Company - The 53-page Ford Sustainability Report 2004-2005, Our Route to
Sustainability: Connecting with Society, the fifth of its kind, is based on the GRI guidelines. Ford was
the first automaker to achieve ISO 14001 environmental management certification and it has committed
to produce a regular climate change report. In 2003 Ford adopted a Code of Basic Working Conditions
to safeguard human rights in the supply chain, including child labour, forced labour and health and
safety standards worldwide and already reports against it. A Report Review Committee (comprised of
representatives from Ford, NGOs like CERES, TERI Europe and the World Resources Institute, and
academia, among others), commends Ford’s efforts for “the candour and clarity” of its reporting.

BP – In its 78-page Sustainability Report 2005: Making Energy More …, BP emphasises the
company’s commitment to responsible operation. Beyond compliance with the law, it declares to pursue
“universal standards of individual and collective behaviour that are applied in every activity,
everywhere around the world” in terms of “safety, integrity, security, environmental stewardship and
people management”. It reports on emissions to air, water management, hazardous waste disposal, care
for biodiversity, decommissioning of plants and their remediation actions in some 4000 sites, among
other key topics. The 2005 report resulted from a revision of BP’s reporting practices in 2004 to assess
the reaction of readers after conducting surveys, interviews, benchmark studies and workshops in
Europe and the U.S. on them. The report claims to comply with the UN Global Compact principles,
GRI and IPIECA standards, the Oil and Gas Industry Guidance on Voluntary Sustainability Reporting.
Ernst & Young ascertains the information reported by BP against the AA1000 Assurance Standard.

Novo Nordisk – The Novo Nordisk Annual Report, Financial, Social and Environmental
Performance 2005 combines financial and non-financial reporting in a 116-page publication. In 2005
two more Novo Nordisk facilities achieved ISO 14001 environmental management certification and 340
suppliers were evaluated for their social and environmental performance, with 87% finding it
satisfactory. Novo Nordisk operates in 79 countries and employs nearly 22,500 persons. Since 2003 the
Danish company’s sustainability report is assured against the AA1000 Assurance Standard, the
International Standard on Assurance Engagements 3000 and the UN Global Compact by
PricewaterhouseCoopers.

Source: OECD

36
IV. Sectoral studies on CSR communication

107. Against the background of the general discussion of types of information schemes and strategies
emerged so far, this section investigates whether and to what extent they are being used to inform
consumers about CSR practices in four sectors, cut flowers, textiles and clothing, fisheries, and cosmetics.
The study also examines the effectiveness of schemes in reaching consumers as well as their impact on the
market in the selected sectors. As mentioned in the Introduction, these sectors were drawn from the work
that OECD recently carried out on Trade and Structural Adjustment (TASAP), with the exception of
cosmetics.

108. To facilitate follow-up discussion, the sectoral studies are organised with a similar outline. The
studies first present a brief overview of the industry, including worldwide production and trade patterns,
which provides basis for understanding the sector. The sectoral overview also covers industry-specific
environmental and social situations relevant to CSR, particularly in the context of international trade. The
second part of the studies looks into sector-specific CSR objectives, issues and/or instruments, and briefly
notes the performance of major players and CSR-leaders in the sector. The third and main part examines
how and to what extent companies in these sectors use different communication schemes. While mainly
descriptive, this part of the analysis helps determine which information schemes are used relatively more
widely in each sector. The information collected will feed into the assessment of the effectiveness and
impact on the marketplace of the different schemes that will be included in the final report.

109. The final objective of the paper is to identify good practices concerning effective communication
to consumers on CSR and to hence draw lessons by comparing different information schemes in different
sectors. Towards that end, this report offers some tentative observations for each sector surveyed about
information availability and communication strategies aimed at consumers, while raising certain questions
for discussion among stakeholders.

A. Fisheries27

1. Production and trade

110. Global fish supply from both catches and aquaculture has grown to 140 million tonnes in 2004.
While production by catches has hardly increased since 1990, aquaculture production has expanded
quickly reaching 45 million tonnes by 2004. Overall, fish provided more than 2.6 billion people with at
least 20% of their average per capita animal protein intake (FAO, 2004). Fish exports worldwide have also
risen rapidly from USD15 billion in 1980 to USD71 billion in 2004, so that the volume of fish exports
amounts to 30-40% of the total production around the world. Almost 200 countries supply fish and seafood
products to the global marketplace, consisting of more than 800 commercially important species of fish,
crustaceans and mollusks, including 30 species of shrimp alone (Anderson, 2004).

111. Developing countries account for 50% of the total world exports, earning net revenue of USD18
billion in 2003 – a figure larger than that earned from their exports of tea, rice, cocoa and coffee combined.
The top 5 exporting countries in value terms include the EU countries, China, Thailand, Norway and the
United States, while Japan, the United States and the EU represent major importers responsible for 74.3%
of world imports (USD56 billion). Shrimp, groundfish, tuna, salmon and small pelagics are the most traded
species, collectively claiming 51% of the total export value.

27 This paper investigates both the fish harvesting and processing sectors, additionally with limited reference
to retailing of fish products (a service) as far as it has relevance to CSR in the fisheries sector.

37
112. According to the FAO State of World Fisheries and Aquaculture (SOFIA), there has been a
consistent downward trend since the 1950s in the proportion of marine fish stocks with potential catching
capacities. Modern fishing fleets use highly sophisticated technology to locate and catch fish in the sea,
and hence concerns about over-exploitation are rising. The FAO report estimated that “in 2003 about half
of the stocks were fully exploited (52%) and therefore producing catches that were close to their maximum
sustainable limits, while approximately one-quarter were overexploited (16%), depleted (8%) or recovering
from depletion” (FAO, 2004). Nonetheless, FAO projections suggest that world fishery production will
range between 107 and 144 million tones in 2010.

113. The fishery sector had a relatively short supply chain from sea to plate in the past. Traditionally,
fishermen and local fishmongers directly sold fish to consumers. Nowadays, fish and seafood are supplied
through a global network of fishing vessels and aquaculture establishments, processors, wholesalers and
retailers. The last three decades have witnessed the fast globalisation of fisheries. The volume of fishery
production has less than doubled during the period between 1976 and 2002, while exports have more than
tripled. Global seafood giants like Unilever (Netherlands), Fjord Seafood ASA (Norway) and Nichirei
Corp. (Japan) play an important role in exporting and importing frozen, canned and fresh fish. In terms of
retailing, it is noted that big supermarkets are gaining an ever-growing share in the seafood markets. For
instance, UK market growth is driven by large retailers, with nearly 90% of seafood sales made through
supermarkets where expenditure was up 6% in 2004/2005, representing 78% of total seafood sales of £1.84
billion (Dryden, 2005).

2. Corporate social responsibility of fisheries companies

114. Of a variety of issues, CSR in fisheries centres on environmental concerns. ‘Sustainable fisheries’
is the core concept to which most fisheries companies have pledged adherence. International norms have
been put in place to govern sustainable fishing. Company CSR activities and communications in fisheries
are essentially intended to support these international agreements, together with regional and national
regimes, on sustainable fisheries management policies. These include inter alia:

• United Nations Conventions on the Law of the Sea (UNCLOS)

• Agenda 21 and the Rio Declaration on Environment and Development
• Straddling and Highly Migratory Stocks Agreement
• FAO Code of Conduct for Responsible Fisheries

115. Compared to environmental concerns, social aspects have played a less important role on the
CSR agenda of the fisheries business, despite the fact that fishermen work in a dangerous environment and
fishing is an important source of income for developing countries.28 According to FAO statistics, fishery
and aquaculture production activities provided direct employment and revenue to an estimated 38 million
people in 2002, of which the highest numbers are in Asia (87% of the world total), followed by Africa
(7%). It is known that occupational fatalities among fishery workers far exceed the overall national
averages in many countries. Currently, the ILO has special instruments which provide fishing workers with
labour standards, such as minimum age, medical examinations, articles of agreement, etc. However, some
regulations are irrelevant today because they are outdated.29

28 Some have the view that ‘sustainable fishery’ encompasses the socio-economic implications of production.
29 The International Labour Conference in 2005 tried to revise labour standards in the fishing
industry. This still pending initiative is intended to produce a comprehensive standard on work in the
fishing sector, revising the existing seven ILO fishery-related instruments – five Conventions (concerning
minimum age, medical examination, articles of agreement, accommodation and competency certificates)
and two Recommendations (concerning vocational training and hours of work).

38
116. Environmental concerns have been well embedded in the CSR vision and strategies of fisheries
companies, while social issues seem not to have been fully reflected. Most fishing enterprises manifest
their commitment and adherence to sustainable fishing on their websites, in company reports or in other
communications. To discharge themselves of their social responsibility, a number of fishing companies and
seafood processors implement social programmes including the training of workers, community
contributions and improvements of employee safety and health. Recently, big supermarkets which sell
seafood in large quantities have been strengthening their commitments and activities for CSR in sourcing
fish products, which could have remarkable impacts on fisheries through their widespread supply networks.

3. Providing information on fish and fish products

117. Information gaps are also found in the fisheries sector. According to a Seafood Choices Alliance
study (2003), for instance, American consumers feel that they do not have enough information to be able to
identify kinds of seafood that are overfished or caught in a way that is harmful to other sea creatures and
the ocean environment. The study also found that 67% of respondents hoped to get more information
about the environmental impact associated with the seafood they buy.

a) Certification and labelling

118. Information relating to fishing and seafood production is provided through use, to varying degree,
of the various communication tools described in the previous chapter. Labelling is the most widely
employed CSR information scheme in fisheries, though its market impact reportedly remains modest.
There are indications that consumers would like to get the desired information through labels (see Table 1).
The Seafood Choices Alliance study (2003) found that consumers prefer labelling, as the main source of
information at the point of purchase, to information sources such as newspapers, other printed materials, or
even the Internet. 72% of respondents stated that they would be more likely to buy seafood bearing an
environmentally responsible label.

Table 1: Preferred seafood information channels

Extremely Somewhat Very

interested interested Interested
Label on the fish you buy in the store 31% 35% 18%
Cookbook containing recipes for fish that are good 20% 31% 22%
environmental choices
Newspaper articles 19% 32% 28%
A website about seafood 11% 19% 20%
Articles in food or cooking magazines 10% 23% 26%
A printed card to carry in the wallet 10% 15% 21%
A file to download on PDA or cell phone 4% 10% 13%
N = 1000
Source: Seafood Choices Alliance, 2003

119. Quite a number of labelling schemes have hitherto been developed globally and nationally to
provide labelling for fish and seafood. Faced with a growing number of labelling schemes in fisheries, the
FAO Committee of Fisheries adopted in March 2005 a set of voluntary Guidelines for the Ecolabeling of
Fish Products in an effort to ensure the sustainability of marine fisheries. The new guidelines are aimed at
providing guidance to governments and organisations that already maintain, or are considering establishing,
labelling schemes for certifying and promoting labels for fish and fishery products from well-managed
marine capture fisheries (FAO press release). The following sections investigate two main labels for fish
and fish products, whereas Annex IV.A.1.presents a summary of several schemes for fisheries.

39
Marine Stewardship Council (MSC)

120. The Marine Steward Council (MSC) is the leader in providing a label for fish and seafood
originating from marine catches. The MSC was initially established in 1997 by a joint initiative of Unilever
and the WWF, but now its operation is fully independent. The MSC developed the Principles and Criteria
for Sustainable Fishing in consultation with stakeholders, which are to be used as a standard for third-party,
independent and voluntary certification. The Principles consist of three components – protection of marine
stocks, protection of the ecosystem and effective fishery management system, while incorporating the FAO
Code of Conduct for Responsible Fisheries.

121. The MSC labelling scheme is composed of two different certifications applied to the fish
harvesting and the downstream supply chain respectively–fishery certification and chain of custody
certification. Whereas the former is awarded to a fishery, the latter is given to processors, wholesalers and
restaurants that want to apply the MSC logo to a fish product. Although participants in a certified fishery
may display the MSC logo on fish sold directly to consumers, in practice this is only the case for lobsters
and other marine products sold in a fresh state (OECD, 2005). Participants in downstream supply chains
display the MSC logo on products from certified fisheries only if they undertake chain of custody
certification and then enter into a license agreement with the MSC. Currently 12 fisheries have been
conferred fishery certification,30 and 230 MSC labelled products are available in 23 countries.

122. Certification and use of MSC label incur costs, i.e. the pre-assessment, the full assessment,
annual audits, chain of custody certification, and logo licensing fees (MSC website). Except for the
licensing fee paid to the MSCI (the operative arm of the MSC), all the costs are agreed upon between
accredited certifiers and the client, depending on the size and complexity of fishery and supply chain.
According to Peacey (2000), the costs for pre-assessment range from a few thousand to over USD20,000,
while those of full assessment between USD10,000 for a small and more than USD100,000 for a large,
complex fishery. Peacey also estimates that the cost of chain of custody certification ranges from under
USD1,000 to over USD5,000. The fee for on-product use of logo has been set at 0.1% of product value,
with a minimum fee of USD2,000. From the beginning, developing country governments and environment
NGOs as well as small-sale fishermen raised concerns that the cost of certification and requirements for
sophisticated management system would preclude small-scale fisheries and fisheries in developing
countries from certification (Phillips et al, 2003).

123. The evaluation of the MSC labelling scheme is mixed. In Europe, the scheme has gained support
from over 100 organisations in more than 20 countries. It has been particularly successful in having its
labelled seafood placed on the shelves of such mega-retailers as Sainsbury’s, TESCO, Carrefour and Metro.
In fact, certified fish account for 1.5% of all seafood sold through stores in the United Kingdom, and
European branded fish processors and retailers already sell USD73 million of MSC-labelled fish like
salmon (Searle, 2004). However, the scheme has not yet been successful in gaining widespread recognition
among environmental NGOs and marine conservation organisations, particularly in the United States,
where its market share amounts to only 0.05%. Moreover, the MSC is being criticised for its inability to
certify fisheries in developing countries as well as for not incorporating labour concerns in the fishing
industry.

30 They are: Alaska Pollock - Bering Sea and Aleutian Islands, Alaska Pollock - Gulf of Alaska, Alaska
Salmon, BSAI Pacific Cod longline fishery, Burry Inlet Cockles, Hastings Fleet Dover Sole Fishery,
Hastings Fleet Pelagic Fishery, Loch Torridon Nephrops, Mexican Baja California Red Rock Lobster, New
Zealand Hoki, South African Hake, South Georgia Patagonian toothfish, South West Handline Mackerel,
Thames Herring, and Western Australian Rock Lobster.

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Dolphin-Safe or Dolphin-Friendly tuna labels

124. ‘Dolphin-safe’ or ‘Dolphin-friendly’ tuna labels are the most widely recognised eco-labels for
fish products. However, they are also among the most confusing ones, from a consumers’ perspective.31
There are several third-party schemes as well as a large number of self-declared dolphin-safe labels.32 An
international survey carried out by nine leading consumer organisations (Decision News Media, 2004)
pointed out that “up to six different logos and wording were found on 25 tins of tuna, each claiming that
the tuna was fished without harming dolphins. Terms used included ‘dolphin friendly’, ‘dolphin safe’, ‘no
threat to dolphin species’ and ‘certified fishing, drift net free’ –but there was no assurance or verification to
back up any of these claims.”33 Indeed, dolphin-safe labels are a typical case where labels are competing
with each other and first-party and third-party labels have resulted in consumer confusion.

125. The US Congress passed the Dolphin Protection Consumer Information Act (DPCIA) in 1990,
which stated that dolphin-safe labels may only be applied to tuna harvested in a manner that is ‘not
harmful’ to dolphins. The concept of harmful manner includes death or serious injury to dolphins through
deliberate targeting or encirclement of dolphins. For this claim, tuna catches must be verified by an
independent observer from the National Marine Fisheries Service (NMFS). A multi-government-led
dolphin-safe mark is the AIDCP label. The parties to the Inter-American Tropical Tuna Commission
(IATTC) signed the Agreement on the International Dolphin Conservation Program (AIDCP) and launched
its dolphin-safe tuna certification and label in 2001.34 The Parties to the AIDCP claim that it is the only one
in the world supported by a comprehensive and transparent multilateral tracking and verification system
administered by member governments and the treaty organisation. In contrast, the EII dolphin-safe tuna
label is an NGO initiative. The Earth Island Institute (EII) began to put pressure on US tuna companies in
1986 by launching the International Marine Mammal Project and developed a dolphin safe standard and
labeling in 1990. 35 Currently, the EII has approved around 200 processing companies and fishing
companies, respectively, for dolphin -safe tuna suppliers in the globe.

126. Contrary to the United States, there is no legal instrument governing dolphin-safe tuna labeling in
the European Union. The fact that skipjack tuna other than yellowfin tuna is canned in the EU markets may
make the dolphin-tuna issue less controversial in Europe as skipjack is not associated with dolphins.
However, European tuna processors have begun to use first-party labels to appeal to consumers, and the
canning industry in partnership with NGOs has also developed a second-party certification scheme (for
example, cooperation between the EII and the British Association of Canned and Preserved Food Importers
and Distributors [BACFID]). Brown (2004) argues that given the fact that all canned tuna used in the
United Kingdom has traditionally been skipjack, the retailers’ claim of the moral high ground can be
interpreted as a wish to gain from the publicity afforded by labeling and avoid any bad publicity and
potential consumer boycotts similar to those promoted by the EII in the United States.

31 The dolphin-tuna debate centres on the yellowfin tuna fishery in the Eastern Tropical Pacific (ETP), where
dolphins are killed or injured as bycatch during the tuna fishing.
32 For instance, all three largest US tuna processors, namely Starkist, Bumble Bee tuna, and Chicken of the
Sea, have their own dolphin safe logos.
33 See http://www.meatprocess.com/news-by-product/news.asp?id=53610&idCat=65&k=the-truth-behind.
34 The IATTC, established by international convention in 1950, is responsible for the conservation and
management of fisheries for tunas and other species taken by tuna-fishing vessels in the eastern Pacific
Ocean. (IATTC homepage) Now its members are El Salvador, Costa Rica, Ecuador, France, Guatemala,
Japan, Korea, Mexico, Nicaragua, Panama, Peru, Spain, United States, Vanuatu and Venezuela.
35 The EII is a non-profit, non-governmental conservation organization based in the U.S, which develops and
supports innovative projects that counteract threats to the biological and cultural diversity.

41
Prospect for fish certification and labelling

127. Although the current retail sales of fish products carrying an eco-label are well below 1% of the
total seafood market, the interest of consumers and retailers in the issue of sustainable fishery has been
increasing around the world. As big supermarket chains currently supply a large share of the seafood
bought by consumers, their views and policies are critical to the future of seafood labels. In general, there
is a growing trend of them preferring labelled seafood to unlabelled products. In November 2005, retail
giant Wal-Mart announced it would begin certifying all of its imported farm-raised shrimp to ensure that it
is raised in a way that minimises negative environmental and socio-economic impacts (Seaweb press
release, 2005).36 According to these news, other companies taking similar actions with regard to seafood
sustainability include McDonald’s, British retailer Tesco, Darden Restaurants (the largest casual dining
restaurant company in the world), Xanterra Parks & Resorts (servicing many U.S. national parks), and food
service company Bon Appetit Management Co.

128. The European Commission has been promoting debate on whether or not rules are needed for
ecolabelling schemes of fishery products. For debate and stakeholder consultations, the Commission has
proposed three options – 1) let the private sector carry out its own initiatives, 2) create a EU ecolabelling
scheme for fish and fisheries products, and 3) establish minimum requirements (EC, 2005). Currently the
EC prefers the third option, without ruling out the other two, and is pursuing further consultations with a
view to finding answers to various questions relating to a fishery labelling scheme. Sceptics argue that,
labels for fish products have faced difficulties arising from the nature of fisheries, particularly in verifying
and monitoring, because most fishing takes place in remote seas and fishes from different sources can be
mixed during processing. Actually, some people think that fish labels are only a marketing ploy. While
several certification and labelling schemes have proven to be rather successful in the last decade, fishery
labels still face the hurdle of gaining and maintaining credibility as a communication tool for both
consumers and producers.

b) Reporting of fisheries companies

129. According to the triennial KPMG survey (2005), consumer markets including food and beverages
are still lagging behind other markets in CSR reporting, while the CSR issues in these markets are
becoming increasingly evident. None of the current 831 companies which register their reports in the GRI
database are fisheries companies. 37 Our website search also suggests that fisheries companies seldom
publish stand-alone CSR reports. Therefore it is difficult to analyse CSR reporting in fisheries sectors on
the basis of comparing the reporting practices of different companies. The report of one company, Unilever,
can provide an indication of how and what fisheries companies report.

130. Unilever has been complimented for being an “early adopter” of CSR. It has been issuing public
reports on its environmental performance since 1996 and on its social performance since 2001. It publishes
these reports separately but plans to merge them by 2007. Its environmental report, entitled “Listening,
learning, making progress”, provides a snapshot of its approach to managing environmental responsibilities.
The report covers issues such as the company’s vision and mission, its environmental strategy and
management, its stakeholder engagement, the company’s code of business principle, and its environmental
performance and achievements. For fisheries, the report states Unilever’s commitment to labelled fish and
procurement from sustainable sources. Its social report also includes Unilever’s social vision and mission
and emphasises society contribution, local investment, communicating with consumers, investing in people,
safety working conditions and health of employees. Both reports were given assurances by an independent
auditor.

36 See http://www.seaweb.org/mediacenter/press-2December05.php.
37 See the GRI datebase (http://www.globalreporting.org/guidelines/reports/search.asp).

42
c) Consumer guides

131. Fish and fish products have hardly drawn attention from consumer guides. In fact, most consumer
guides do not include product recommendation for seafood and, if any, they provide only quality-related
information but not environmental and social information. Recently some environmental organisations,
semi-state agencies and NGOs have begun to publish fish guides. In general, these guides carry fish lists
that are recommended or avoided, together with information on fishing gear, capture methods, bycatch and
biology. The guides are locally-oriented, focusing on fish species that are mostly consumed in a specific
region (see Table 2). However, they do not contain information relating to producers, processors and
suppliers.

Table 2: Selected fish guides

First
Guide Publisher Main information
published
ƒ fishing methods and management
ƒ impacts of fishing on marine life and local
Marine
communities
Good Fish Guide Conservation 2002
ƒ biology, status, capture methods and fishing
Society (UK)
impacts for 65 species of fish commonly eaten in
the United Kingdom
ƒ 68 commercial fishing species and their ecological
Forest & Bird status expressed in rank
Best Fish Guide 2004
(New Zealand) ƒ information on their fishing methods, bycatch, and
biology, etc
Marine ƒ over 30 of most commonly eaten seafood species
Sustainable
Conservation 2005 ƒ Information on unsustainable seafood species and
Seafood Guide
Society (Australia) damaging fishing gears
Seafood Choices ƒ ‘Enjoy!’ or ‘Avoid!’ categories of fish species
The Fish List Alliance and its 2004 ƒ levels of mercury, PCBs, or pesticides
partners (USA)
ƒ ‘Best Choices’, ‘Good Alternatives’, and ‘Avoid’
Monterey Bay
Seafood Watch - categories of fish species
Aquarium (USA)
Source: OECD

d) Company communication strategies

132. In the age of the Internet, provinding information online has become a ‘must’, even for SMEs. A
large number of fish harvesting and processing companies as well as seafood retailers have homepages
through which they communicate with consumers and other stakeholders. On their websites, many
fisheries companies state their commitments to sustainable fishing and provide related information, e.g.,
about adherence to ISO 14001 or SA8000, observance of a quality standard, sourcing policies and
production practices. Websites run by retailers include more product-related seafood information such as
new products, ingredients, recipes and prices. Seldom mentioned is where and how fish was caught or
grown, the bycatch and sustainability status of the species.

133. Packaging and labelling is one of the traditional ways of communicating with consumers. For
seafood, packaging features such terms as ‘natural’, ‘eco’, ‘fresh’, ‘bio’, ‘organic’ and ‘pure’, like other
food products. Many companies have also developed self-declared labelling schemes in order to have
better marketing opportunities (e.g., private dolphin-safe tuna labels).

43
134. As globalisation has deepened in the fishing and processing segments of fishery production, it
also has left its imprint on the retailing of fish and seafood products. Now accounting for large market
share of seafood sales, supermarket chains are introducing innovations in the way in which seafood is
traded and marketed. They offer their own brand seafood, covering a wide range of products. Some have
declared codes of principle or sustainable sourcing policies (for example, Mark & Spencer’s Policy on
Sustainable Sourcing of Fisheries Products). Their large sales volumes give them bargaining power vis-à-
vis fishing companies and processors and they often buy without middlemen, through direct contact with
fishing vessels and aquaculture establishments.

135. The strengthened role of big retailers may create opportunities for narrowing the existing
information gap in the fisheries sector. Supermarket chains listen and watch consumer demands closely
and then react efficiently. Moreover, they are extremely sensitive to negative campaigns. By providing
information related to fish and fish products desired by consumers, supermarkets may create spill-over
effects of benefit to also other players in the industry.

4. Conclusion

136. It appears that CSR communication in the fisheries sector is at a rudimentary stage, as is CSR per
se in the sector. Key findings can be summarised as follows:

• CSR in fisheries has evolved mainly in the form of support of sustainable fishing, with relatively
more emphasis on the environmental dimension than on social aspects. Many fisheries companies
have pledged to sustainable fishing and made efforts to comply with international fishery regimes
including the FAO Code of Conduct for Responsible Fisheries.
• Some labelling schemes, i.e. MSC and Dolphin-safe tuna, have gained worldwide recognition;
however the market share of labelled fish products is still small. Perceptions of consumers and
businesses tend to differ concerning the use of business-to-consumer labelling.
• CSR reporting used in other sectors to inform stakeholders about CSR performance at the
company level and consumer guides recommending products based on some CSR attributes are
communication tools not often found in the fisheries industry. The arrival of fish guides carrying
sustainability information so as to appeal to cause-driven seafood consumers is a recent
development.
• Like in the retailing of other goods, supermarket chains have gained significant shares of fish and
seafood sales. Based on their market power, they are well placed to innovate in delivering
information to seafood buyers more efficiently and effectively.

137. In fisheries, there are also some flagship cases in CSR performance and communication with
stakeholders, for instance Unilever and Ecofish. They seem to have gained consumer support in niches of
the larger fisheries sector and may be illustrative of good practice. However, it may be premature to draw
conclusions based on these cases for the wider fisheries industry, given that CSR has only started to find its
way into this industry.

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 TD/TC/WP(2006)17

Annex IV.A.1: Fisheries-specific environmental and social certification and labelling schemes

Scheme Application Elements Instruments

Marine Stewardship Council Marine catch Environment ƒ MSC Principles and Criteria
(MSC) No social ƒ Certification and MSC logo
ƒ www.msc.org
AIDCP Dolphin-safe tuna Dolphin, Environment ƒ AIDCP Tuna Tracking and Verification System
Eastern Tropical Pacific No social ƒ Certification and AIDCP logo
ƒ www.iattc.org/DolphinSafeENG.htm
EII Dolphin-safe tuna Dolphin, Environment ƒ Earth Island Institute "Dolphin Safe" standards.
Eastern Tropical Pacific No labour ƒ Certification and EII logo
ƒ Dolphin Project Home Page
Marine Aquarium Council Ornamental marine life Environment ƒ Ecosystem and Fishery Management (EFM) Core Standard
(MAC) No social ƒ Collection, Fishing and Holding (CFH) Core Standard
ƒ Handling, Husbandry and Transport Core Standard
ƒ Certification and ‘MAC Certified’ logo
ƒ macweb.inets.com/default.asp
Global Aquaculture Aquaculture Environment ƒ Guiding Principle for Responsible Aquaculture
Alliance (GAA) Partly social ƒ Codes of Practice for Responsible Shrimp Farming
ƒ Best Aquaculture Practices Standards
ƒ www.gaallliance.org
International Federation of Aquaculture Environment ƒ Organic Aquaculture Standard
Organic Agriculture Partly social ƒ Certification and IFOAM seal
Movement (IFOAM)* ƒ http://www.ifoam.org/
Naturland* Aquaculture Environment ƒ Naturland Standards for Organic Aquaculture
Partly social ƒ http://www.naturland.com/
Soil Association Aquaculture Environment ƒ Soil Association Standards (30.0 Aquaculture)
Certification* No social ƒ http://www.soilassociation.org/web/sa/saweb.nsf/home/index.html
* denotes an organic certification and labelling scheme.
Source: OECD

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B. Cut flowers

1. Production and trade

138. The market for cut flowers is a highly competitive market in which importers are continually
seeking new, special and different products, such as tropical flowers, summer flowers, bouquets, foliage.
While no data are available on total world production, the biggest flower-growing countries are the
Netherlands, Colombia, Kenya, Israel and the United States. In other countries, like South Africa, Ethiopia,
and Malaysia, domestic industries are developing (CBI, 2005; ITC, 2001). China still is in the process of
developing the production necessary to supply its own huge market but has a big export potential.38

139. Consumption of cut flowers is concentrated in Western Europe, North America and Japan. The
EU alone represents about half of the world’s market, with EU consumers spending around EUR 12
million on flowers and foliage in 2004. Germany is the biggest EU consumer of flowers, followed by the
United Kingdom, France and Italy (CBI, 2005).

140. The Netherlands is the leading importer of flowers from outside the EU, accounting in 2004 for
56% of total EU imports. Most of the flowers imported go to the Dutch auctions and then are re-exported
to other European markets. Around 20% of the EU’s consumption is supplied by non-EU. Besides the
Netherlands, other major cut flowers suppliers to the EU market are Kenya, the leading non-EU supplier,
Israel, Colombia, Ecuador and Spain (see Annex IV.B.1).

141. The Netherlands, Kenya, Colombia, Ecuador, and Israel are the leading flower exporters of the
world; however, more than two-thirds of the international trade in flowers takes place within Europe. The
EU exported cut flowers for almost EUR 2.6 billion in 2004 – mainly to other EU countries, Switzerland,
Russia and the United States – of which nearly EUR 2.3 billion were exported or re-exported by the
Netherlands.

142. The United States is another major importer of flowers, mostly from South America. Virtually
no fresh cut flowers were imported into the United States prior to 1960, when it was difficult to transport
perishable goods over long distances and large-scale floriculture production took place mainly in the
United States and Europe. Today, Colombia (leading by far), Ecuador and the Netherlands are the major
foreign suppliers of the United States. The US also exports cut flowers, mainly to Canada, Mexico, the EU,
and Japan (ITC, 2003).

143. The advantage of growing low-priced mass-produced flowers has gradually shifted away from
the OECD region, whose imports originating in developing countries have been increasing strongly over
the past 10 to 15 years. The decrease in production area and in the number of growers reflects productivity
gains but also factors such as rising costs of labour and energy and consequently increasing competition
from countries with low-cost production. Cut flowers production tends to be labour intensive in non-OECD
countries, whereas growers in Europe and other parts of OECD apply high tech production methods geared
towards delivery of novel products of the highest quality.

38 By the end of 2001, China had more than 20,000 flower-growing enterprises and over 2,000 flower
wholesale markets, with 1.45 million people working for this expanding trade. In 2001, China sold a total
of 3.8 billion fresh flowers and 810 million potted flowers. (People’s Daily, Beijing, 3 October 2002).

46
2. Channels of distribution and major actors

144. Marketing of flowers involves two kinds of supply chains, depending on the types of supplier-
buyer relationships that have been established. One chain runs from (1) producers/exporters, (2)
auctioneers, (3) wholesalers, (4) retailers, and (5) consumers. At times agents also play a role. This chain is
typical when flowers are marketed using the Dutch Auctions, the most important market outlet for flowers
worldwide where wholesalers purchase flowers for re-export internationally. The other chain is controlled
by supermarket buyers, which in some markets (e.g. United Kingdom) account for a significant portion of
flower sales (Tallontire et al, 2005).

145. Flower farms come in all sizes but larger farms prevail in OECD countries compared to
developing countries, although there is a global trend towards consolidation. (VIDEA, 2001). The bulk of
the world flower trade – perhaps 60% - is channelled through auction houses in the Netherlands, which
determine the prices, especially in Europe where they have a 30-40% market share in cut flowers. E-
commerce is increasing in importance in the floricultural business, with activities directed to improving
information transfer and trade between growers, auction, wholesaler and retailer. In 1995, Tele Flower
Auction (TFA) was one of the first electronic trade systems that have been established in the floricultural
trade.39

146. Exporters can also sell directly to importing wholesalers. In fact, dependence on selling through
flower auctions is giving way to direct trade with wholesalers. There is also a trend of big retail chains
increasingly buying large volumes of flowers directly from growers, hence bypassing the auctions as well
as all other intermediate players. Supermarkets have invested in supply chain relationships and are pushing
value-added activities (e.g. making ready-to-go bouquets) down the chain towards exporters. For example,
in Kenya large growers have tailored their operations to sell directly to retail outlets in Europe (CBI, 2005).

147. At the retail level of the distribution chain, traditional florists (independent retailers who purchase
their products from the wholesale market and directly from domestic producers) still play an important if
not dominant role in distribution at the retail level in most OECD countries. Florists offer flowers of higher
quality, broader assortment and use attractive presentations and a range of services. However, the
importance of retail chains (supermarket chains, do-it-yourself stores, garden centres) has been growing.
Supermarkets (Tesco, Sainsbury, Safeway and Asda) hold an estimated 65% share of the U.K. retail
market. In Germany, supermarket chains (e.g., Tengelmann, Metro, Edeka and Rewe) account for a cut
flower market share of 14%, which demand by price-conscious Germans has been steadily increasing since
2000 (CBI, 2005).

148. While consumer preferences and patterns differ across countries and even within countries by
geographical region, income and other criteria, most consumers buy flowers on impulse. The emotional
element is important when buying flowers: they are associated with beauty, joy, festivities, nature, and as a
sign of affection and love. Furthermore, the quality expected by consumers is generally very high. They
expect not only freshness at the moment of purchase but also a long vase life and they value the colour and
scent of the flowers. Price is not the main criterion, but important. Flowers and bouquets are mainly
purchased as presents but they are increasingly bought for own use as well. These purchases of flowers for
own use are driven by the sales of lower prices flowers in supermarkets (CBI, 2005). There is also
increasing demand today for ready-for-use products, one-stop shopping and sales through the Internet.

39 TFA was created in 1995 by East African Flowers, the largest private importer of non-EU produce in the
Netherlands, as a private auction focusing on imports from outside Europe. The auctioning is done through
a computer network and the buyers are selected among the 100 biggest Netherlands wholesalers. FFA does
not impose any quantitative restrictions on imports and it buys on a contract basis. Supply criteria and
commissions are comparable with the traditional auctions (BDI, 2005). See also http.//www.tfa.nl.

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3. CSR issues arising in the cut flowers industry

149. CSR is generally viewed in the context of trade with the developing world. The global flower
industry has received some negative publicity in recent years because labour unions, environmental
activists and other NGOs have raised a number of issues linked to conditions of production on developing-
country flower farms.

150. The majority of workers on these farms are young women with little education. Jobs are often
temporary, seasonal, casual and migrant – hence precarious. Long working hours and hazardous conditions
are also common. Health and safety provisions are often poor, with workers not being provided with
protective clothing, toilets, washing facilities and drinking water (Smith et al, 2004; ETI, 2005).

151. Like other agricultural industries, the cultivation of flowers can be very harmful environmentally.
Inappropriate choice of cultivation methods and the use of chemicals and fertilisers can damage large areas
of land and water. Too much use, or misuse, of herbicides and pesticides can threaten human, animal and
plant life. Also, the trade, transport, and sales of flowers and plants cause a considerable amount of
packaging waste such as boxes, trays and plastics that can cause pollution due to toxic substances.

152. Since the early 1990s, conditions in the floricultural industries of Colombia and other growers
have received considerable media coverage and public attention, both locally and abroad. Civil society
organisations monitoring developments have repeatedly alleged that there are worker rights violations,
health problems, etc. in some of the farms in these countries, with organisations including Women
Working Worldwide and the Ethical Trading Initiative of the United Kingdom being drawn into the debate.

153. Even if more consumers know much more about the industry today and express concern, the
crucial impetus for transparency and accountability of the behaviour of flower growers has come from
campaigns conducted by environmental and social pressure groups. Box 4 illustrates various information
strategies which several European NGOs used when they started to promote a “Fair Flower” Campaign in
1990 aimed at establishing more humane and ecologically sustainable conditions of production for cut
flowers exported by Colombia and other developing countries. This campaign has been widely credited for
educating and mobilising consumers in Europe.

Box 4: Educating consumers - The “fair flowers” campaign

In 1990 a “fair flowers” campaign was launched by a Swiss-Colombian working group on cut flowers issues,
Greenpeace and the World Wildlife Fund, who just before Mother’s Day when sales of flowers are high, set up three
flower stands in the centre of the city of Basel, Switzerland. The stands were decorated with flowers and surrounded
with posters depicting poor working conditions and high pesticide use in the Colombian flower industry. Passers-by
were given a newspaper like publication about the cut flower industry, a leaflet summarising the campaign, and a
flower. They were asked to write to the Colombian Embassy to express their concern about working conditions in the
industry.
The Swiss working group also approached Swiss supermarkets and by 1995 Migros agreed to create a label for
flowers produced under “socially and environmentally sustainable conditions”. By this time, the flowers campaign
had broadened from Colombia and other South American companies to include Africa. In subsequent years, the
working group continued with Mother’s Day campaigns and organised other activities, such as conferences on Fair
Flowers that brought together Swiss florists, supermarkets, importers a, the chemical industry (pesticide producers),
NGOs and aid agencies.
The campaign was eventually extended to the neighbouring countries of Austria and Germany. As in the case of the
Swiss campaign, the original focus was Colombia but later on was broadened to include other countries, such as
Ecuador, Zimbabwe, Kenya and Tanzania.
Source: VIDEA, 2001

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154. It is important to point out that, unlike what has happened to certain other consumer products or
corporate brands becoming entangled in CSR controversies, no one has ever advocated or organised a
consumer boycott of cut flowers from specific countries or flower sellers. As the development NGO
Oxfam Canada explains, in its virtual flyer calling for Valentine’s Day 2004 Action on behalf of
improvements in the production conditions on developing-country flower farms: “Oxfam does not favour a
boycott of flowers. The women workers whose rights we wish to defend urgently need their jobs. What’s
more, we believe that when customers voice concern for the situation of flower workers directly to retailers
it will send the message down the supply chain…” (Oxfam Canada, 2004).

4. Providing CSR information about cut flowers

155. The Fair Flower campaign has shown that consumers can be mobilised into writing letters to
politicians or CEOs to demand corporate responsibility on flower farms. Yet when they shop for a bunch
of flowers from a florist or supermarket in their neighbourhood, consumers likely will have a hard time
identifying the production characteristics of these products. The reason is that although labels for cut
flowers have been developed in several countries, many operate at the level of business-to-business
relationships and do not show up at the florist shop or supermarket. This situation is now gradually
changing.

a) Certification and labelling

156. Information schemes used in the market for cut flowers are dominated by buyer or sectoral codes
of conduct, and labels, or symbols, attesting certification based on these codes. Many important schemes
are geared towards facilitating business-to-business transactions along supply chains. In this case, the final
consumer often sees no label and has no knowledge that the flowers bought have been certified under
existing schemes. For illustration, a selection of labels is depicted in Annex IV.B.2.

i) Predominantly business-to-business certification and labels

157. The Milieu Programma Sierteelt (MPS) in the Netherlands has developed criteria for labelling
agricultural products, including flowers, based on growers’ production practices. Focusing initially on
environmental criteria (MPS – ABC – environmental certification) the programme now covers also social
aspects, such as safety, health and working conditions (MPS – Socially Qualified). A flower grower can
join MPS and get the label when he has met requirements of an audit. Regular checks will guarantee that a
producer is still actively engaged in the regime. After initial difficulties, growers in Zimbabwe, Kenya,
Tanzania and Israel were able to obtain the MPS label (OECD, 2005). The MPS-labelled flowers, which
buyers see for instance when they participate at Dutch auctions, are priced the same as flowers from other
sources.

158. A variant of the MPS scheme, MPS-GAP, is benchmarked with the flowers and plants scheme of
EurepGap, which provides a standard for good agricultural practices intended to reassure consumers that
food is being produced in a safe and sustainable way. Participants must show compliance with criteria that
include environmental effects of agricultural production and some occupational health and safety criteria
that however are not to be considered in depth audits of social conditions (OECD, 2004). As a business-to-
business scheme, the Logo available to accredited farmers when selling to distributors may not appear at
the point of sale to the final consumer.

159. In several developing countries, export growers have taken initiatives to develop their own
voluntary certification systems. Examples are the programmes of Kenya Flower Council (KFC), the
principal body for growers in Kenya, the Code of Practice of the Zambia Export Growers Organisations
(ZEGA), the Florverde label in Colombia and Sello Verde in Ecuador, each with different standards

49
based on their country’s regulations. Presently, the KFC has 42 members who have 52 separate farm units
accounting for about 80% of Kenyan flower exports. In addition, the Council also has 13 associate
members representing the major cut flower auctions and distributors in the United Kingdom, the
Netherlands, Switzerland and Germany. Florverde (literally Green Flower) is the voluntary social and
environmental programme of the Colombian flower sector, or Asocolflores. To date, 56 out of the 141
farms participating in the Florverde programme are certified by the Swiss-based SGS auditing company,
and it is expected that all member farms will participate in the coming years (Mathias, 2005). These labels
have become increasingly recognised in the international floricultural trade. Wholesale buyers are often
aware of them.

160. Trading relationships in the cut flower market, and notably participation in the sourcing chain of
supermarkets, increasingly require that thousands of flower growers in developing countries adopt
suppliers’ codes setting standards of social and environmental conduct. In the case of Kenya, for example,
supermarkets which once accepted audits by the Kenya Flower Council now require adherence to their
own company codes (often modelled on some other code, such as the Base Code of the Ethical Trading
Initiative, or the International Code of Conduct for the Production of Cut Flowers). This shift appears to
have been triggered by an international campaign in 2002 taking issue with poor conditions on Kenyan
flower farms (Dolan and Opondo, 2005). It has been noted that flower growers must expect to get several
monitoring visits a year from different retail buyers because they have to satisfy several suppliers’ codes
and related auditing requirements (Collinson, 2001).

161. Many of the industry and individual company codes use as their standard the International Code
of Conduct for the Production of Cut Flowers (ICC), developed in 1998 by the European flower campaign
with the participation of NGOs and labour unions. This Code builds on international human rights
standards, basic environmental standards and ILO Conventions. It calls for equality of treatment for flower
workers, living wages, working hours limited to 48 hours a week or less, detailed health and safety
measures, protection of the environment, and a ban on child and forced labour, among other provisions.
First implemented by Swiss supermarket chains, the standards set out in the ICC since have become
increasingly accepted by other flower distributors, especially in Europe.

ii) Consumer labels

162. To date, few label programmes tell final consumers whether the farms that grow flowers respect
minimal environmental and labour conditions or not. All major ones are operating mostly in the European
market. In North America and elsewhere, certification and labelling schemes have not really taken hold.
Where available, data concerning participation and impact of individual labelling schemes are shown in
Table 3.

163. A relatively recent initiative to promote certified cut flowers in the marketplace is building on the
momentum created by Fair Trade Certified coffee and other products carrying the label of the Fair Trade
movement. This label tells consumers that producers receive a guaranteed fair price and that their
purchases make a contribution towards helping primary producers and their workers overcome economic
marginalisation. Flowers and other (mostly agricultural) products bearing the Fair Trade mark are certified
by the FLO, the international umbrella organisation for Fair Trade labelling, and are sold in either
specialised shops (“Worldshops”) or commercial outlets including supermarkets and online stores.
Retailers can obtain a licence to use the label. To use the label, they must source from producers that have
been inspected and certified as meeting the Fair Trade standards. There are 20 national labelling initiatives
across Europe, North America and Japan, which licence the Fair Trade label in their respective countries.
The initiatives are known under such different labels as Max Havelaar (e.g. in Switzerland, France),
TransFair (e.g., Canada, United States), Fairtrade (United Kingdom). In 2003, the Fair Trade logo was
unified although the various national labels are still used to some extent.

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164. It is only very recently that cut flowers have found their way into the Fair Trade Certified scheme
and so far they are being sold only in four European countries (Krier, 2006):

• In the United Kingdom, the supermarket chains Sainsbury and Tesco began to sell Fair Trade
certified flowers starting in 2004; today these are available in all supermarket chains.

• In Switzerland, certified flowers (mainly roses) bearing the Max Havelaar label are available at
retailers such as Migros, Coop, Blumen 3000, Volge and small florist shops since 2001 and have
reached an unusually high market penetration of 28%.

• Following the examples from both the United Kingdom and Switzerland, in September 2005 the
first Fair Trade labeled flowers, namely roses, were sold in the Belgian market, followed by the
introduction in October 2005 of Fair Trade roses in Norway.

165. Another labeling programme aimed at informing consumers as well as traders is the FLP Label
(Flower Label Programme). The scheme was launched on the eve of Mother’s Day in 1999 by the
German Flower Campaign and the German flower importers association BGI. Unlike Fair Trade Certified,
FLP applies exclusively to cut flowers and targets growers in developing countries exporting to the
German market. FLP certified farms commit to high social and environmental standards based on the ICC
and are publicly known. Shoppers can look up German florists participating in the programme by
consulting an database on the Internet.

166. FLP certification forms the basis for some private labels in other countries. An example is the
Sierra Eco label, launched in 1999 by Sierra Flower Trading Ltd., the largest importer and distributor of
cut flowers in Quebec and other Eastern provinces of Canada. The Sierra Eco label is given to flowers
supplied from farms in Ecuador and Colombia that have Florverde and FLP certification. FLP and
Florverde inspect and report directly to Sierra on the compliance by the farms that are accredited with the
labels. Consumers can obtain information about wholesalers and florists carrying flowers from Sierra Eco
farms by accessing an online database on the company’s website.

Table 3: Reach of selected consumer labels

Consumer label programme
Max Havelaar Switzerland (since
2001)
FLP (Flower Label Programme),
Germany (since 1999)
Sierra Eco, Canada (since 1999)
Rainforest Alliance seal
Fair Flowers and Plants (FFP)
Source: compiled by OECD
Participants/market impact
Migros, Coop, Blumen 3000, Volge and small florist shops; The flowers are
mainly roses originating in Ecuador, Kenya, Tanzania, Zimbabwe and
Zambia. They represent 28% of cut flower sales in the country.
9 German wholesalers; 60 FLP-certified flower farms in Ecuador, Kenya,
South Africa, Tanzania and Zimbabwe (a first from Colombia joined
recently). Flowers from these farms are sold in Austria and Germany under
the FLP Label, in Switzerland in co-operation with the Max Havelaar
foundation. There are nearly 15 000 workers in the FLP certified farms.
Some 13 farms are signed up under this label. Sierra works with 9
wholesalers and 22 florists across 4 Canadian provinces. Labeled flowers
account for over 15% of the company’s flower sales in Canada.
23 certified floriculture farms from Costa Rica, Ecuador and other Latin
countries. Distributors in the United States, Czech Republic, France,
Germany, Sweden, United Kingdom.
Approximately 100 registrations from growers worldwide, 35
traders/wholesalers, 20 retailers (April 2006). First 4 target consumer
markets: Germany, UK, Sweden, Austria.

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167. Production of fern, among other agricultural products, is covered by a certification programme
managed by the New York based Rainforest Alliance, a non-profit organisation formed in 1986 and
dedicated to the conservation of tropical forests, and the Sustainable Agriculture Network (SAN) -- a
coalition of independent, non-profit conservation groups from various countries. Unlike the Fair Trade
Certification system, SAN standards do not emphasise how products are traded but focus on how farms are
managed (social and environmental improvements leading to sustainable farm practices).

168. Farms that meet the certification standards are awarded the Rainforest Alliance Certified seal of
approval, which can be used to market the certified products. The companies selling these products are
registered with the Coalition and get permission to use the Rainforest Alliance Certified seal of approval,
for example food companies and supermarkets. A written contract governs and monitors the use of the
seal, the handling of certified products, and marketplace promotion.

169. Finally, a new international flower label for consumers recently introduced is the Fair Flowers
and Plants (FFP) co-ordinated by the International Flower Trade Association. The FFP label was
announced in 2005 and allows producers, traders and retailers to demonstrate - through use of a label that
the product will receive at the point of sale - that they guarantee horticultural products produced
sustainably, i.e. with low impact on the environmental and good working conditions.

170. FFP membership requires that growers meet MPS and ICC environmental and social standards,
or schemes that are comparable. Their products will then be sold by affiliated FFP traders and retailers,
who also satisfy the requirements of the FFP label, which will be affixed to the product only when it
reaches the retailer. All this will assure the consumer that the flowers or plants bought are in fact
sustainably produced. The campaign hopes to stimulate (European) production of and demand for
sustainably produced flowers and plants and enjoys the support of a large number of parties including MPS,
Dutch and German wholesale organisations, traders and international trade unions.

b) Reporting

171. The world’s leading flower producer is Dole Food Company Inc. It bought large Colombian
farms in the late 1990s and now sells its own flowers, which correspond to 15% of Colombia’s flower
exports (Mathias, 2005). Three pages of its latest CSR report are devoted to a description of the
environmental and social performance of Dole Fresh Flowers, which employs 9,300 workers in 560
hectares of greenhouses and sources floral products from the United States, Colombia and Ecuador. On the
environment, the report highlights that when Dole Fresh Flowers was first certified in December 2000 to
ISO 14001, it was the only flower grower in the world certified to this standard. The company also points
out that it has instituted award-winning occupational health and safety programmes and achieved a 29%
reduction in well water use between 2003 and 2004. On labour conditions, the report mentions that an
employee training programme was carried out to reinforce specific job accountability in harvest and post-
harvest operations, and that one of the company’s farms in Colombia was recognised out of 380 enterprises
nationally by the relevant national authorities for achieving zero accidents in 2004. It further mentions that
employees are getting transportation, on-site medical assistance and other benefits and that the overall
accident rate decreased by 14% in 2004 and the disability index by 53% (Dole, 2005).

172. More generally, disclosure through corporate reporting is an information system operating rather
remote from the consumer. Also, unlike retailers in the clothing sector, for instance, there are not many
flower retailers with brand names located in the OECD region that the public would instantly recognise.
Among retailers, large diversified stores and supermarket selling cut flowers like Wal-Mart, Marks &
Spencer, Tesco and Auchan issue CSR reports annually that may or may not contain information on CSR
issues in the cut flower industry. Major garden centre groups are highly unlikely to engage in CSR
reporting at all.

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c) Consumer guides and related information sources

173. Consumers rarely obtain CSR information for cut flowers from consumer guides, and reports like
the one which Austria’s online consumer magazine Konsument. published in early 2006 on “where to find
fairly produced flowers” are the exception.

174. Similarly, there are many Internet-based knowledge banks or informational websites specialised
in answering questions that consumers may have about flower and plants (including, for example the
Guidesheet for Consumer Floriculture offered by Purdue University; and the Human Flower Project,
featuring international news and discussions of how people live through flowers). Our research uncovered
no information about flower certification labels or on CSR in the flower industry. Neither is much CSR
information presently available, it seems, from floriculture industry newsletters and websites (e.g. the
market information exchange system Flower Web).

175. For the interested shopper, this leaves the websites of civil society groups engaged in this
industry perhaps the most readily accessible source of information of a news-like or educational type.
These groups publish regular newsletters or educational leaflets, or they simply allow consumers visiting
their websites to learn about the most recent developments of an ongoing campaign. For example:

• Flower Coordination Switzerland (formerly Fair Flowers campaign) has published newspapers
dedicated to flower issues, including “If Flowers could speak…”(1995) and publishes an annual
Mother’s Day information letter” with an update on the “Fair Flowers” campaign under way
since 1990 (VIDEA, 2001).

• UK-based Fairtrade Foundation provides on its website information about available certified
products, including flowers. The visitor can download a list of UK retailers that sell certified
flowers and learn about the farms that supply them
(http://www.fairtrade.org.uk/products_flowers.htm).

• Among the current projects which the US-based International Labour Rights Fund (ILRF)
reports on its websites, the visitor finds for instance information about a Fairness in Flowers
Campaign that the ILRF launched on Mother’s Day in 2003, including reports, press and news,
photos by flower workers etc.

5. Company strategies

a) Advertising campaigns and promotional activities

176. It is common for flower producers to seek to increase their visibility, and cultivate a consistent
positive product image, in key export markets through marketing campaigns and promotions. For example,
the Dutch Flower Council conducts a series of local promotions around holidays in its target markets. In
Italy, the Flower Council supplies flowers to the Vatican for the Easter service. In the United Kingdom, the
Kenya Flower Council has established Kenya Flower Day, giving away a flower to every passenger flying
Air Kenya to London on that day. While these promotional activities seek to increase awareness and are
used to counter potential misperceptions in the marketplace having to do with such issues as flower quality,
variety and reliability as a supplier, production conditions and other CSR issues are not among them.

b) Online florists and advertising

177. None of a number of large Floral wire or web-based flower order services researched (including
Florists’ Transworld Delivery (FTD), Teleflora, Fleurop) advertise that they carry certified flowers. Some

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online flower delivery services provide information about the country of origin of their flower products
(e.g. swissflowers.ch) and one French online florist carried De Havelaar flowers in his virtual catalogue
(bebloom.com). Interested consumers must look for online flower shops such as rosavenir.com in France
or ecoflora.ca in Canada, which specialise in selling certified flowers but a not numerous.

178. Some CSR information can be found on the websites that flower farms themselves have created
in order to market their flowers. For example, the website of Agrícola Amata S.A., a former coffee farm
located in the tropical highlands of Costa Rica and now exporting cut flowers mainly to Switzerland and
Germany, mentions that the democratic system of the country, where the army was abolished many
decades before, has allowed the development of a solid economic growth, good school system, no child
work, and the establishment of human rights earlier than elsewhere in the region
(http://agramata.com/aboutus.html)

179. However, it would be virtually impossible for consumers to trace the flowers that their florist
shops carry back to this specific or any other flower grower.

c) The case of certified organic flowers

180. Communication and marketing targeting the consumer and the broad public is more visible in the
relatively new market for organically grown flowers.

181. At this time, few countries have important organic cut flowers production (mainly the
Netherlands) and many cut flowers producers do not believe organic growing can be profitably or easily
accomplished – the cost of certification are too high for margins that are no higher than what they are
currently getting (Chicago Conscious Choice, February 2003). Yet as illustrated in Box 5, the industry is
heavily engaged in fostering public awareness, educating consumers and positioning company brands.

Box 5: Creating a market for organic flowers

Conscious Choice magazine, published in Chicago bills itself a resource to help readers live healthier lives and create
a sustainable society. Employing headlines such as “Cut the Toxins, Buy Organic”, the magazine has sought to draw
customers’ attention to the alleged advantages of organic products, including flowers (http://www.
consciouschoice.com/2003/cc1602/organicflowers1602.html, February 2003)
In one of its advertisements, the Organic Consumers Association, which bills itself an online and grassroots non-
profit public interest organisation campaigning for health, justice, and sustainability, asks the rhetorical question:
“Why buy organic flowers for Valentine’s Day & Everyday”? Besides mentioning the natural beauty and
environmental benefits of organic flowers, the Association describes how pesticides and other toxic chemicals used
on flowers affect the health of farm workers and florists, citing inter alia a study according to which 50 % of workers
in the Costa Rica flower industry have symptoms of pesticide poisoning (http://www.organicconsumers.org/
organic/flowers020204.cfm).
Founded in 2002, US-based online seller Organic Bouquet uses the Internet to cultivate a national market for its niche
product, organic flowers. The company expects to do about USD6 million in mostly business-to-consumer sales in
2006, up from USD2.5 million last year. This is still small change compared to its competitors in the market for
traditional flowers: retailer 1-800-Flowers.com Inc. sells USD300 million a year in flowers and gifts and ranks No. 30
in the Internet Retailer Top 400 Guide to Retail Web Sites; another competitor, Provide Commerce Inc., sells
USD150 million a year, mostly in flowers, at Proflowers.com. Nonetheless, Organic Bouquet is a leading voice in the
organic movement. It is raising public awareness and has helped boost demand with wholesale deliveries to US
natural food chains like Whole Foods, and by persuading charitable organisations, including Amnesty International
and the global health care organisation Project HOPE, to list the company on their websites as a preferred flower
supplier who contributes about 15% of every sale to the charity at hand (Demery, February 2006).
In the Netherlands, Shell has been quite successfully selling organic flowers at many of its points of sale since 1994,
becoming the country’s largest seller of organic flowers. In France, Carrefour, too, has started to sell organic flowers.
(Bioflora, 2006).

54
182. Organic flowers are eligible for some of the existing voluntary organic label programmes
certifying agricultural produce. New labels are in the making. In the United States, where the emerging
organic floral US market is estimated to have reached USD8 million in 2003 and could grow by 13%
annually through 2008 (Organic Consumers Association), the Veraflora label was launched in 2005. This
voluntary label was developed expressly for the US fresh-cut flower trade and is part of a broader initiative
to move the national flower industry on the path towards sustainability. The standard includes organic
agricultural practices in its criteria and addresses not only environmental production practices but also
labour rights (Organic Bouquet et al, 2005).

6. Some concluding observations

183. If consumers wish to obtain information about the conditions and impact of flower production,
they have to search actively. The picture painted in this chapter is that information that would enable
consumers to include cut flowers in their choice of whether or not to buy products derived from socially
responsible production is not readily available. Many cut flowers sourced from certified producers do not
carry a consumer label. With the exception of organic floriculture, neither corporate advertising nor
branding play a major role as communication channels at the retail level.

184. This situation raises a number of questions. One question is why some of the information systems
typical for other consumer goods that are marketed as ‘ethical’ or ‘socially responsible’, have not (yet)
taken hold more widely in the OECD market for cut flowers.

185. With respect to product labelling, a partial answer may be that it is inherently difficult to label
products such as flowers at the point of sale. First, labelling individual flowers that originate at certified
farms is time consuming and hence costly, and selling certified and uncertified flowers at the same retail
outlets raises issues such as how to handle mixed bouquets. Second, the structure of the retail system in
many countries may speak against labelling. In countries like Germany and France, many small outlets sell
flowers, which makes compliance monitoring difficult. This would help explain why, for example, cut
flowers are starting to show up among Fair Trade Certified products only now that Fair Trade products
have found their way onto the shelves of the large supermarkets. In fact, according to FIAN Germany,40
when the German organisers of the Flower Campaign in 1995 proposed to create a quality seal for cut
flowers, the Fair Trade labelling organisations argued that the dispersion of the cut-flower trade into more
than 15,000 small outlets in Germany would make a seal difficult to control (www.fian.de, 2006).

186. Another question is why existing certification and labelling initiatives are centred on Europe and
much less common in other regions of OECD. A case in point is the Fair Trade movement. One
explanation given for why this movement is much less visible for instance in North America is that the
concept of fair trade, with its focus on small and marginalised producers, is less applicable to some of the
countries in Latin America that are the main suppliers to the North American market; there, large scale
flower production dominated by large companies is more common than in Africa (VIDEA, 2001). But this
may only be a partial explanation for the relatively more developed European certified flower market.

40
FIAN Germany belongs to the FoodFirst Information and Action Network (FIAN), an international human rights
organisation with national sections and individual members in over 60 countries around the world. It is a non-
partisan not-for-profit organisation and has consultative status to the United Nations.

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 Annex IV.B.1: The leading suppliers of cut flowers and foliage to The Netherlands, 2004

Share of
developing
Flower species Share of suppliers (%)
country suppliers
(%)
Rosa Kenya (54), Ecuador (10), Zimbabwe (10) 94
Dianthus Colombia (46), Spain (22), Portugal (8) 63
Orchids Thailand (57), Germany (14), South Africa (12) 72
Gladiolus Spain (46), Germany (37), Israel (10) 3
Dendranthema Germany (49), Poland (10), Denmark (7) 11
Other cut flowers Israel (34), Kenya (16), Ecuador (12) 45
Prepared cut flowers Israel (25), Spain (19), Italy (12) 23
Foliage Turkey (20), China (19), India (14) 68
All cut flowers & foliage Kenya (34), Israel (15) Ecuador (10) 72

Source: Eurostat, 2005, cited in CBI (2005), Cut flowers and foliage, EU Market Survey 2005, Table 5.5. on page 48.

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 Annex IV.B.2: Select labelling schemes applicable to cut flowers

Milieu Programma
Fair Trade Certified seal
Sierteelt (MPS)

Fairtrade Foundation,
Florverde, Colombia
United Kingdom

Flower Label
Programme (FLP), Max Havelaar
Germany

Fair Flowers Fair Plants

Rainforest Alliance
(FFP)

Source: compiled by OECD

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C. Cosmetics

1 Industry overview

187. With output amounting to more than EUR 35 billion, exports totalling EUR 7 billion and sales
totalling. Europe is the world’s leading producer of cosmetic products. This sector is also a significant
employer in Europe, employing over 150.000 people directly, and a further 350.000 jobs are created
indirectly in retail, distribution and transport (EC, 2006). The next largest players in this sector are the
United States, with output amounting to EUR 32.6 billion in 2002, followed by Japan with output totalling
EUR 14 billion.

188. The EU, United States and Japan are the major markets and account for a large portion of total
world cosmetics sale. European exports of cosmetics into the USA reach EUR 1 425 million (20% of EU
export), EUR 910 million (13%) into the Middle East, EUR 940 million into Asia (excluding China and
Japan), and to Japan alone: EUR 440 million (6%) (Eurostat, 2003).

189. The market for cosmetics has continued to grow world-wide over the 1998 - 2002 period. Sales
in European have grown at a rate averaging 5% a year, from EUR 47 billion in 1998 to EUR 57 billion in
2002. The US market has grown by a slightly lower percentage, whereas sales in Japan have remained flat.
Overall, the OECD market seems to be rather mature, which is driving the main players to be very
competitive and innovative to ensure future growth (see Box 6).

190. A considerable portion of the growth in the cosmetics market is driven by innovation, with
several thousands of new or improved products placed on the market each year (Eurostat, 2003). Major
cosmetic companies replace or reformulate around 25% of their products every year. Innovation in the
sector is essential to maintain global competitiveness, improve performance, safety and reduce the
environmental impact of products.

191. Natural ingredients are one factor contributing to the sustenance of growth in the maturing
cosmetics market. Consumers value healthier lifestyles and perceive cosmetics containing natural
ingredients as having health benefits and as being of higher quality. With this perceived value added,
cosmetic manufacturers are able to charge higher prices for these “natural” products. Origins and Aveda,
for example, have achieved success by emphasising the quality and naturalness of their products, which in
turn has prompted smaller producers to introduce competing products (Williams, 2002).

192. The supply chain in the cosmetic sector can be fairly short. For SMEs, and especially companies
that specialise in “natural ingredients” products, the distributor can also be the producer, with just one
(natural and/or chemical ingredient) sourcing step. Only very small SMEs produce their own ingredients.
However, the chain can also be fairly long and complicated, involving the purchase of ingredients abroad
or from a wholesaler, processing in another company, and sometimes even buying the final packaged
product by the distributing brand. As with any other industry, cosmetic companies must be acutely aware
of who is doing what all along the supply chain. As perceived by general managers, the key issue for the
botanical supply chain is traceability. This is particularly important for the cosmetic industry because most
companies source their ingredients in bulk from wholesalers (European cosmetic market, February 2003).
In the context of CSR and “natural” cosmetic advertising, this traceability today is more important than
ever.

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 Box 6: Profiles of some players
The Body Shop (UK company, recently purchased by L’Oreal)
It operates in 52 markets, has 2 045 stores, and 6 788 employees. It sources the majority of its products either from
suppliers which the company screens under its ethical trade programme or from its community trade suppliers.
Avon Products Inc. (US company)
Totals USD7.7 billion in annual revenues, has 48 000 employees. It is the world’s leading direct seller of beauty
products. Its primary distribution channel is direct sales, through 4.9 million independent Avon sales representatives.
Avon totals one billion transactions each year.
Natura (Brazilian company)
Natura turned 35 in 2004. It totals 3 177 employees in Brazil and 378 abroad (mainly in south America). It is ranked
among the 3 most valued brands in Brazil with a business volume reaching USD1.2 billion. Natura also employs
about 433 000 sale representatives.
Shiseido (Japanese company)
Totals USD6.1 billion in sales revenue, of which 73% from Japan, 12.5% from Europe, 7.8% from Asia/Oceania and
6.37% from the United States. The company employs 24 839 people.
L’Oreal (French Company)
L’Oreal is the number one cosmetic producer worldwide,
with a total of 18 brands. In 2004 it totalled EUR 14.5
billion in consolidated sales. Also, it employed 52 000
employees worldwide (with almost 3 000 in R & D),
which are spread worldwide as shown in the pie chart:

Many SMEs are also trying, sometimes with impressive success, to enter the arena of socially responsible natural
cosmetic companies.
A good example is Burt’s Bees. All of its products are made with natural ingredients and the packaging is
environment-friendly. A very small enterprise just 10 years ago, its rapid growth illustrates the public’s attraction to
these “green companies”. With around 80 employees in their headquarters in Maine, Burt’s Bees reached in 2002 its
target sales projection of USD45 million (a 50% rise from 2001). If growth continues this presently privately owned
company could go public someday. (Foster, 2002)

2. CSR in the cosmetic industry

193. In terms of CSR objectives, the cosmetic industry is fairly homogeneous and focuses primarily
on environmental protection, ecological issues and social standards. Of importance to this industry is that
these issues are somewhat linked to the nature of the ingredients themselves, “natural” being, for the
consumer, a good conveyer of corporate social responsibility.

194. Environmental protection objectives include: use of biodegradable plant substances in product
formula, control of environmental impact of production sites, shipping centers and administrative sites,
volume and weight control of packaging while emphasizing the use of recycled materials, and controlled
use of in-store display.

195. Ecological objectives are primarily care for ecosystem preservation, as many plants are included
in the recipe of cosmetics products. The over-harvesting of some indigenous plants is an issue for
companies trying to gain, and maintain, the CSR image.

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196. Social objectives are twofold. They can be internal to the parent company and include: reducing
accidents, employee turnover and increasing employee satisfaction, with issues such as promoting women,
people of different race or culture, handicapped, being an equal opportunity employer. Other aspects are
the preservation of cultures abroad, through start up funds for agricultural project to reintroduce native plan
production, for instance, or the Trade not Aid programme of the Body Shop in the 1990s. Sourcing
strategies are used to reinforce these policies. For example, when companies create a demand for native
plant and tree material, a tribe can sustain itself as a small agricultural or craft-based economy and does not
have to sell or lease ancestral lands to a business that might strip it of vegetation crucial to ecological
balance.

197. CSR issues have been long considered and assumed in the cosmetic industry, with pioneer CSR
companies coming from this sector. Natura, The Body Shop and Aveda, are considered to be the pioneers
of green marketing. These companies’ founders’ core ambition clearly was to change consumption patterns.
Natura for example, is considered to be a leading company in the field of CSR. In 2004, it ranked 16th in
the top 560 sustainability reports. Over the years 2002-2004 it experienced a 32% growth in sales,
compared to only 20% for the Brazilian cosmetic market. At a national level it owns 10% of market share
(UNEP 2005). However, it is stressed in the UNEP study that the Body Shop is the only company
approaching mainstream status, with 0.45% of market share versus 6% for the leader.

198. Habits, or “social status” attached to purchasing decision are high in the cosmetic sector. The
advertising-to-sales ratio ranges from 5-10%, but the social commitment of a company is a self-publicising
brand-differentiating factor, and companies are therefore able to gain market shares rapidly while limiting
advertising investment. Example: “The Body Shop, which accounted for less than 0.5% of the global
cosmetic market, was the 28th most valuable brand in the world. Similarly, in 2004, Natura’s brand value
represents 113% of it annual sales versus only 33% for L’Oreal” (UNEP 2005).

3. Communicating CSR in cosmetics sector

a) Marketing

199. The marketing of CSR in the cosmetic sector is most of all a result of product positioning.
Companies gain competitive advantage and market share by branding their products around CSR, making
CSR an inherent part of the brand and of the image of the company. To achieve this positioning, their
marketing mix is carefully chosen, with a moderate use of mass advertising, and a use of non-traditional
marketing channels such as direct promotion, or product placement in movies and TV shows, for example.
These techniques, often referred to as guerrilla marketing techniques, or undercover marketing, enable the
marketing campaign budgets to remain limited, although a portion of this budget is often used to convey
social and environmental messages (at least 15% of Natura’s budget for example) (UNEP 2005).

200. Other guerrilla techniques favoured by cosmetics corporations include the use of their own stores
as a media, where much information is available to the consumers in form of leaflets, posters, or
employees conveying messages about CSR advantages of the brand. Undercover advertising is also widely
spread, companies publishing environmental or social messages, but underlying them with their brand logo,
in order to raise their positive brand image. An example of this can be found in the Box 7.

Box 7: Shiseido and its in-store recycling

Shiseido places in direct view, in its stores, recycle bins for customers to bring their empty Shiseido product bottles
back. This conveys a message that Shiseido is not just talking about CSR issues, but actually taking part in them. It
also enables the consumer to participate in the process, and reaches him/her directly. The company also publicised
this recycling activity in the newspaper as environmental advertisement, which is also a form of undercover
marketing. This campaign did not cost it much but was effective in advertising its socially responsible image.
Source: Shiseido’s environmental impact report (2004)

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201. In their marketing mix, cosmetic companies also make a wide use of the media to convey their
CSR image. First, with their PR teams, they communicate with local communities and organise special
events that mix fun and CSR. This enables them to reach existing customers while generating significant
impact with the media. They also make a broad use of the prizes that printed Medias issue every year on
the topic. For example, Avon has for 6 consecutive years been named among the 100 best citizens by
Business Ethics Magazine. Without paying for any printed advertisement in the Magazine, they will be
cited every year in the study in that magazine, and also in every article referring to the study appearing in
other magazines. Furthermore, they include this information in their CSR report. Again, this does not cost
them anything.

202. Finally, another channel used by Anita Rodrick of the Body Shop in the 1980s and 1990s, which
has set a precedent in that matter, is lobbying. Anita Rodrick fought for some time for the setting of UK
and European rules regarding animal testing, and succeeded in raising government interest in this issue. In
1998 the United Kingdom effectively ended cosmetics testing by refusing to renew any animal testing
licences for cosmetics purpose. During 2002, in the 7th amendment to its Cosmetics Directive, the
European Commission moved to ban the sale or marketing, from 2009 onward, of cosmetics tested on
animals.

b) Reporting

203. The cosmetic industry includes pioneering CSR-reporting companies, and it continues to hold
this advantage over other industries. The Body Shop was the first company to publish a comprehensive
stakeholder report in 1995, including CSR issues (environmental, social, and ethical). Natura was the first
Brazilian company to publish the results of its social and economic impact alongside its annual financial
results. L’Oreal is the only French company to be included in all eight international sustainable
development stock market indices (including Dow Jones Sustainability, ASPI eurozone, FTSE4Good and
Ethibel Sustainability).

204. The topics included in the main players’ reports41 are often consistent with one another. They
consist of:

• Ethical trade. They explain that their purchasing decision include standards like fair treatment of
employees, no employee abuse or dangerous working conditions, appropriate wages paid, no
excessive overtime work required, healthy and safe work environment. The Body Shop also
includes a chapter on the limits to ethical trade in its report.

• Animal testing. They report on their involvement to the animal testing cause, especially in
European companies (the United States with the FDA and Japan having different regulations
concerning animal testing in cosmetics), and whether they it practice or not, and if yes, whether on
chemicals or on finished products.

• Supply chain. They explain that they are engaged in community trade, attempting to make a
positive economic and social difference in marginalised communities around the world, by paying
fair prices and fair wages. Also some report integrating locally based manufacturing, and therefore
enabling sustainable community development.

41 These findings are issued from an analysis of CSR reports in the sector and in particular: L’Oreal’s 2004
annual report, The Body Shop’s value report (2005), Shiseido’s environmental impact report (2004),
Avon’s corporate responsibility report (2004), and Natura’s annual report (2004).

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• Ecology. They report on the sustainable use of local biodiversity (for example, Natura and
biodiversity in Brazil).

• Human rights. They all more or less claim to respect human rights. The body shop reports in line
with the UN norms on the responsibilities of trans-national corporations and other business
enterprises with regards to human rights. L’Oreal prohibits child labour or the use of forced labour
by their suppliers. The group also forbids the employment of anyone under 16. L’Oreal and Natura
also signed the Global Compact Declaration, a UN agreement, committing to adopting and
promoting 9 universal principles concerning human rights, labour and the environment.

• Protection of the planet. They report on their wider use of renewable energy, on their water
consumption, their energy consumption, and their waste management – with detailed, dated facts
and figures, and tables, showing what quantity input (energy, water) they use, and what quantity
output (waste) they end up with. But most interestingly, they also report on further goals to achieve.
They sometimes even have a date and specific target, as they have for sales, but on water
consumption per employee, or output goal, energy consumption goal, waste management goal. In
terms of layout it varies a little between companies, The Body Shop for instance does so in the
form on tables, whereas L’Oreal uses a list.

• Packaging. Cosmetics company selling a packaged product also report on how they try to
minimise hazardous substances in their production, on the R&D of biodegradable packaging, they
even sometimes have a life cycle analysis of those (Shiseido), from production with recycled
material to waste and/or recycling. L’Oreal and Avon also report using some sorts of labels on
their packaging (L’Oreal, Avon).

• Partnerships with NGOs. The main players in the industry are finding it vital to partner with
NGO’s to validate their brand positioning as being socially responsible, environmentally friendly.
The Body Shop partnering on different issues with Greenpeace, amnesty international, UNAids,
WWF; or L’Oreal partnering with UNESCO or Resto du Coeur. SMEs have been following their
example.

• Employee treatment and involvement. Companies report on their in house efforts towards their
employee: how they encourage volunteering, ensure accurate training, try to reduce accidents,
stating that strengthening values and reducing turnover are key to employee satisfaction. They also
report on their encouraging of diversity and multiculturalism, their inclusion of handicapped in
their workforce, and on guaranteeing good fair working conditions for everyone.

• Ingredients. What type of ingredient they use is also mentioned in the reports, especially for those
products that are made with natural ingredients. Trying to phase out bad chemicals seem to be a
major concern for the sector. For example, the Body Shop plays the transparency card and admits
in respect to bad chemicals that they are not there yet but at least trying (see Box 8). The chemical
issue is a sensitive one for cosmetics companies. Most chemicals in beauty and care products are
not being disclosed to the consumer.

• Internal CSR organisation. They make it a point to report on how they organise, internally, to
make sure CSR issues are taken into consideration, and goals achieved. Some have CSR
management teams, boards, or they comply with ISO standards.

• Auditing. The biggest players also include at the end of their CSR report, a CSR report audit by
their auditing firm. Whether several pages long, including recommendations (such as Body Shop

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 and URS Verification, their CSR auditing firm) or a simple letter confirming the trustworthiness of
what is mentioned in the report (such as PriceWaterHouseCoopers for L’Oreal)

Box 8: Playing the transparency card: The Body Shop and palm oil
The Body Shop includes a chapter in its 2005 report about palm oil: “Rising global demands for palm oil, a raw
material contained in food, detergents and cosmetics, has significantly contributed to the clearing of forests in
Southeast Asia for oil palm plantation” (Body Shop CSR report) Following this statement, the report explains why,
according to the WWF (World Wide Fund for Nature), boycott of palm oil in not a viable solution, and that they, at
the Body Shop, “do not believe that sourcing from niche provider of organic or fair trade palm oil would help the
hundreds of thousands of people in Southeast Asia, South America and West Africa, whose livelihood depend on
palm oil”. That is why they continue to use palm oil in their product, even considering the alarming deforestation,
biodiversity issues, poor labour conditions and health implication for women working on the plantation, but that they
are members of a WWF initiated Roundtable for Sustainable Palm Oil (RSPO) to “improve conditions”.
Source: The Body Shop’s value report, 2005

c) Consumer guides

205. Consumer guides only about socially responsible cosmetics products are mainly Internet-based,
and consumer driven. A few printed general guides (as mentioned in the Consumer guide section of this
paper) will have cosmetics tested once in a while, but their main focus has been on the chemicals used in
the cosmetic’s recipe and their impact on consumers’ health rather than on the environment or the
conditions of production. A recent concern is with organic cosmetics, but again the focus is mainly on
ingredients and not on the company as a whole, nor its labour practices or environmental impact.

4. Conclusion

206. As a pioneering industry in the area of CSR, the cosmetics sector is one where the CSR
communications issues are well advanced and easily observed and analysed. Manufacturing a product
which the consumer will directly use on himself, on his body, creates a form of intimacy with the market.
The consumer might try to be informed about CSR practices more than for other industries, the internal
alignment of the practices, being, in the consumer’s mind, a good “proof” of a particular brand being
“good” or not.

207. Pioneering socially responsible cosmetics companies tried to “invent” a new sort of company,
reflecting the owner’s vision and values; but corporations are increasingly adopting the CSR concept, to
increase their market shares in this mature market. In the face of the Greenpeace list of noxious ingredients
that make up some everyday beauty and body care product, the smaller, seemingly safer, natural-branded
companies are gaining shares and seducing a growing number of consumers. It has to be asked whether or
not, for these corporations, corporate responsibility is really their focus, or if it might be a marketing ploy,
or an attempt to hide from chemical disclosure.

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D. Textiles and clothing sectors

1. Industry overview

208. The textile and clothing industries produce fibres, cloth and upholstery, and convert them into a
wide range of products, including clothing, towels, bed linens, hosiery and curtains. Also, they are a key
component in other products, ranging from carpets to roofing to tires.

209. Workers in most apparel occupations perform specialised tasks in the production of large
numbers of clothes, but the process involves a number of occupational specialties, from fabric and apparel
patternmakers, cutters and trimmers, sewing machine operators to those in charge of finishing, inspecting
and packaging the finished products.

210. It is estimated that about 40 million workers are employed in the textile and garment industries
worldwide, including around 10 million in the footwear industry. Over the last decades there has been a
shift in employment towards east and southeast Asia but both industries continue to be important sources
of labour in developed and developing countries alike. Naturally, average annual wages across the industry
vary dramatically from country to country, from about USD30,000 in Denmark to USD57 in Mozambique
(AccountAbility, 2004).

211. World trade in textiles reached USD195 billion in 2004 and that in clothing, USD258 billion.
Their combined share of world merchandise exports was 5.1%. Table 4 shows the leading exporters and
importers. The top 15 exporters of clothing accounted for 80.3% of world clothing exports and the top
15 importers, for 93%. The top 15 exporters of textiles accounted for 91.3% of world exports of textiles
and the top 15 importers, for 69.1% (see Table 4).

212. The textiles and clothing sectors are very dynamic and fiercely competitive and major actors can
be found in both developed and developing countries, even in least-developed countries. In the European
Union, for example, the sector has a great concentration of SMEs, notably in northern Italy and eastern
Europe. The European regions where they concentrate are as highly dependent on these sectors as many
developing countries are but the stakes for developing countries are much more decisive because of their
lack of social safety nets, like unemployment and health insurance, in the event of massive worker
cutbacks and plant closures. It is a labour-intensive industry that offers entry-level jobs for unskilled labour
and current technology can be acquired at a relatively low investment cost even in the case of developing
countries.

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 Table 4: World leaders in trade of textiles and clothing
2004, billions of US dollars

Top ten exporters Top ten importers

Textiles Clothing Textiles Clothing

EU 25 71.29 EU 25 74.92 EU 25 67.97 EU 25 121.66

China 33.43 China 61.86 US 20.66 US 75.73

Hong Kong 14.30 Hong Kong 25.10 China 15.30 Japan 21.69

US 11.99 Turkey 11.19 Hong Kong 14.11 Hong Kong 17.13

Russian
Korea 10.84 Mexico 7.20 Mexico 5.79 5.46
Federation
Taiwan 10.04 India 6.62 Japan 5.60 Canada 5.22

Japan 7.14 US 5.06 Turkey 4.17 Switzerland 4.34

India 6.85 Romania 4.72 Canada 4.11 Korea 2.75

Turkey 6.43 Indonesia 4.45 Korea 3.38 Australia 2.67

Pakistan 6.12 Bangladesh 4.44 Viet Nam 3.35 Mexico 2.58

Source: WTO International Trade Statistics 2005

2 CSR issues in textiles and clothing

213. Except for the extractive industries, few other sectors are more environmentally challenging than
that of textiles. Even at the agricultural stage, some raw materials, like cotton, flax or hemp, are among the
most environmentally damaging crops, often receiving multiple treatments of powerful fertilisers and
pesticides. Textile industries also use large amounts of chemicals in the dyeing, printing and washing
processes. Many are produced in jurisdictions where there are fewer controls on effluent, and are high in
biochemical oxygen demand, with high levels of suspended and dissolved solids. In some cases they also
contain heavy metals and phenolic compounds. The use of substances harmful to the environment and
health in the textile industry is, in many developing countries, not subject to any limits whatsoever neither
is water and air pollution, thus affecting other countries that share the waterways.

214. A number of labour issues affect the textiles and clothing sector as well, especially in developing
countries that have a record of child, prison and forced labour, disciplinary practices that include mental
and physical coercion, inordinate working hours, below-standards wages and benefits, hazardous health
and safety conditions and discriminatory practices based on sex, beliefs and personal characteristics.

215. Working conditions in textile establishments of developing countries that supply large
international companies are often cluttered, hot, and poorly lit and ventilated. The workers, including many
undocumented children and women, spend work shifts of 12 to 18 hours a day in crowded and unsafe
conditions, frequently with locked exits (see Box 9). Standard products, like T-shirts, uniforms and
underwear, constitute a low-end market segment that is almost exclusively found in developing countries,
with a concentration of household outsourcing and lowly-skilled female and child workers under informal

65
labour engagements. It is estimated that, for every factory worker in the clothing sector receiving wages,
there are 10 to 14 working in sweatshops or at home for lower wages (No Sweat Shop website).

Box 9: The consequences of below-standards safety conditions

In November 2000 a fire at the Chowdhury Knitwear and Garment factory near Dhaka, Bangladesh, caused 52
dead, including at least ten children. In February 2006 a fire at the KTS Composite Textile factory near
Chittagong, Bangladesh, ended up in the death of 61 to 84 workers, many of them boys and girls.
Every year, 22,000 children die in work-related accidents all over the world. The International Labour
Organization (ILO) reports that there are 246 million children labourers worldwide, 30 % of them below the age of
10. However, since 2002 the number of child labourers has decreased by 11% overall, due to specific campaigns.

216. At a period of global adjustment in the textiles and clothing industry, with pressure on companies
to remain competitive in terms of price, quality and just-in-time delivery, a cascading effect on
employment and labour conditions at the end of the supply chains is a critical concern, not only because of
looming massive layoffs but also because of ‘overnight’ plant closures, which may leave thousands of
workers with their earnings or legal indemnifications unpaid.

217. At a macroeconomic level, developing country governments may yield to pressures in favour of
eroding workers’ rights and environmental protection in view of competitiveness losses (Accountability,
2004). Some consumer advocates tend to put much of the blame on international corporations for these
deteriorating conditions (Steedman, 2005).

3. Communicating CSR in the textiles and clothing sector

218. From a microeconomic viewpoint, the textiles and clothing sectors are increasingly integrated
through international, vertical supply chains, usually encompassing not only production but also
distribution and sales under the aegis of big retailers. A major driver in this direction has been the
development of shopping emporia, starting with Wal-Mart in the 1970s, that now require that suppliers
implement sophisticated information technologies so that data can be exchanged along the supply chain
(mainly for stock management purposes), standards for product labelling adopted, and adequate logistics
implemented (Nordås, 2004).

219. The typical supply chain in the textiles and clothing sectors is an integrated production network
composed of specialised activities, including the sourcing of raw materials, design, production, distribution
and marketing at the individual geography that makes more economic sense in each case, depending on
relative costs, quality, reliability of delivery, access to quality inputs, transport and transaction costs, etc.
Communicating CSR commitments and performance at this global scale is a very complex business,
fraught with all sorts of risks, corporate, social and political, that not only impact on a particular brand but
on the corporation as a whole.

220. Initiatives like the Maquila Solidarity Network (MSN) in Canada and the Clean Clothes
Campaign in the Netherlands employ panoply of strategies aimed at capturing the public’s attention to
issues like labour conditions and ethical trade, including printed newsletters, websites with powerful search
engines, educational kits, promotional materials and opinion-mobilisation events. For instance, teaming
with Oxfam Canada and other NGOs, MSN organised the Cut It Out campaign to encourage Canadian
consumers to send the MSN clothing labels for further relay to federal authorities in an effort to have
legislation passed requiring clothing companies to disclose full information about their sourcing partners in
developing countries.

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221. However, campaigns that target corporations for social and environmental violations, like those
of Clean Clothes against Nike in 1991 or UNITE against Gap in 2002, frequently end up in mixed results
(see Box 10). The reason is that companies are more and more prepared to counteract the claims of hostile
stakeholders by establishing communication conduits directly with their consumers and investors, by
teaming with government agencies and specialised assurance entities to ascertain their commitment to
transparency and fair disclosure, and by adopting a crisis-management approach to allegations of CSR
impropriety. Large companies, as a matter of policy, have fast-response teams set up to deal with serious
allegations of impropriety, like a fire in a remote sweatshop or the uncontrolled discharge of polluting
agents in a river, that can instantaneously trigger damaging press coverage of worldwide scale.

Box 10: Kasky v. Nike

The Kasky v. Nike case, that reached the US Supreme in 2003, exemplifies the problem with voluntary reporting—the
lack of clear-cut guidance and boundaries on what needs to be reported. The case concerned statements made by Nike
in the late 1990s that it paid "on average, double the minimum wage" in overseas countries, and that its workers were
“protected from physical and sexual abuse."
Marc Kasky sued Nike in 1998 for making false representations, using California consumer protection laws (the
presumption that everything a company says is commercial speech and must be accurate). The case hinged on
whether Nike’s statements were commercial or political in nature, the latter being subject to less stringent regulation.
Nike maintained its statements were political because they touched on matters of public concern. The California
Supreme Court disagreed, reasoning that when a commercial entity states facts about its products or operations to
influence consumer decisions, that is, commercial speech.
Although the case ended up in a private settlement, the debate continues. Rather than appeasing its critics, Nike chose
to confront them. In 2005 Nike started publishing on its web site a full list of its sourcing factories together with their
audited social reports.

222. Textile companies discovered early on that consumers want to know more about their production
processes and have resorted to every available tool in the market, including detailed reporting about their
environmental and social practices, both printed and in dedicated sections of their corporate webpages,
adhering to certification and labelling schemes, providing abundant information to impartial intermediaries,
like consumer guides and investor screeners, resorting to monitoring assurance specialists, and adopting in-
the-field initiatives –those that involve remedial action in conjunction with developing countries monitors,
for example– that are fit for media coverage and consumer recognition.

223. Although in certain segments, like those of clothes for babies and household wall fabrics
containing toxic chemicals, CSR need-to-know may be higher in consumers, they do not come close to
those of pharmaceutical products, with their packaging alerts known as black-box warnings. That being
said, there is also evidence that a growing number of consumers in the EU and United States look for CSR
information and are prepared to pay a premium for clothes produced through environmentally-friendly
processes (Dickson, 2001).

a) Certification and labelling

224. Retailers, manufacturers, importers and distributors of consumer textiles and clothing label their
articles as required by government and international regulations and industry practices (like those of
GINETEX, the International Association for Textile Care Labelling) so that representations concerning
quality, performance, origin, etc. are reliable. A typical textile label contains information on fibre content
and dealer identity. The same or a separate label carries instructions on how to clean and care for the article.
In many cases, this is the only information the consumer gets at the store to make her purchasing decision.
Similar information is available for online purchases.

67
225. CSR labels can supplement the information contained in the other labels or be altogether separate.
Here the textile or clothing company can make the conscious decision to invest in CSR labelling as a
differentiating feature (the branding approach) or profit from aggregation, considering that regular
labelling (composition, origin, size and care) is mandatory in most jurisdictions and that consumers do take
heed of the basic information (the reach approach). Although labelling is a widely recognised CSR
information source for the textile and garment industry, its impact on the vast majority of consumers is far
from settled and probably not significant.

226. The general considerations mentioned in this paper’s section on standards and labelling schemes
apply to the textile and clothing industry too. Some standards and labels cover a number of sectors, like
SA8000, ISO14001, EU Eco-label, and Global Ecolabelling Network,42 including textiles and clothing, but
others are specific to it, like Clean Clothes Campaign, Rugmark (rugs only) and No Sweat label. In the EU,
textiles and clothing labels include EU Eco-label (EU 25), Milieukeur Label (EU 15), Stiftung Warentest
(Germany) and Swan (Germany, Denmark, Finland, Iceland, Norway and Sweden), Bra Miljöval in
Sweden and the private labels Neckermann, Umweltprädikat, Umweltbaum, Empfohlen vom IBR (rugs)
and WWF Panda in Germany. Their underlying rationale is that consumer environmental sensitivity
ultimately needs the certification of an independent organisation to be credible. Annex IV.D.1 on selected
CSR textile and clothing labels describes their geographic and textile group span.

227. The EU Ecolabel criteria were extended to include textile clothing and accessories, interior
textiles, fibres, yarn and fabric in 1999 and they guarantee the limited use of substances harmful to the
environment and health as well as reduced water and air pollution, among others. Green public
procurement of textiles products is either mandated or encouraged in EU and US countries.

228. Rugmark, originally a project of GTZ, the German international aid agency, is a global
programme and non-profit organisation working to end child labour for children in India, Nepal and
Pakistan. It does this through loom and factory monitoring, consumer labelling, and running schools for
former child workers. Rugmark recruits carpet producers and importers to make and sell carpets that are
free of child labour. By agreeing to adhere to Rugmark's strict guidelines, and by permitting random
inspections of carpet looms, manufacturers receive the right to put the Rugmark label on their carpets. The
Rugmark label provides the best possible assurance that a carpet is not produced by children. The label
also verifies that a portion of the carpet price is contributed to the rehabilitation and education of former
child weavers. Labelled carpets are sold in Europe and north America. German consumers pay an
additional one percent surcharge for Rugmark carpets which is used to finance schools for the children of
carpet workers.

b) Reporting

229. CSR corporate reporting is widespread and deep in the textile and clothing industry and is largely
centred around labour matters, that are the main point of contention with NGOs and other stakeholders
concerned with working conditions along international supply chains. It is assumed that codes requiring
higher specificity and focusing on monitoring and compliance are likely to meet higher interest in the
public.

42 Including the Australian Ecolabel, Blue Angel (Germany), Ecomark Scheme (India), Eco Mark (Japan),
Environmental Choice New Zealand, Environmental Choice Program (Canada), Environmental Label of
the Republic of Croatia, Environmental Labelling Program (Korea), EU Eco-Label Scheme (including
Denmark and UK), Green Label Scheme (Hong Kong), Good Environmental Choice (The Swedish Society
for Nature Conservation), Green Label Program (Thailand).

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230. Most reports are available to consumers and investors in hard copy, at request, and soft version,
that can be downloaded from company webpages. However, corporate web presence is a part of the
corporate image, especially in an industry dominated by changing fashions and trends. Their lack of
uniformity may make them difficult to navigate by a public that has limited computer skills.

231. The most widely used CSR reporting instruments described in section 3.3 are applied in the
textile and clothing industry as well. Organisations using the widespread GRI guidelines for their CSR
reporting include Adidas and PUMA in Germany; Gap Inc., Nike Inc. and the Timberland Company in the
US; Teijin and Gunze in Japan; Lindström Oy in Finland; and Grupo Mango in Spain. However, big
textiles and clothing companies tend to report under more than one reporting scheme, cross-referencing
information and ascertaining its accuracy through the involvement of independent assurance firms, most of
them specialised offshoots of major financial auditing firms, like PricewaterhouseCoopers, Deloitte
Touche Tohmatsu, Ernst & Young and KPMG, although some segments of activity may require the
participation of technical specialists, especially for environmental assessment topics.

232. The Gap's 2004 Social Responsibility Report: Facing Challenges Finding Opportunities is a
hefty document where the company reaffirms its commitment to improving factory conditions at a time of
historical shift in the garment industry. The Gap has around 3,000 stores and more than 150,000 employees
around the world. The Report states that 99.9% of its factories were inspected to ascertain compliance in
2004 and that 15% underwent remedial action, both with the participation and assessment of Social
Accountability International and Vérité. It includes a breakdown of sourcing countries and the CSR
initiatives being implemented. Their declared strategy includes monitoring factories, integrating labour
standards in Gap’s business practices, collaborating with other actors of the supply chain to drive systemic,
industry-wide change, and communicating their goals, successes and challenges.

233. Many textile companies have global sourcing and operating guidelines of their own, given their
inability to control every aspect of their relationship with hundreds of downstream business partners
around the globe. In turn, having to report for multiple brands, local suppliers experience “audit fatigue”,
given the variety and complexity of the information required from them (Fair Labour Association, 2005).
Some big companies opted for fully or selectively releasing the names and locations of the factories that
manufacture their products worldwide. Levi Strauss & Co.’s corporate webpage for instance has a link that
provides current information on all its sources and the terms of engagement based on its responsible
sourcing code require zero tolerance, immediate action and continuous improvement, criteria that apply not
only to performance but also to remediation. In other words, all CSR responsibility is shifted to suppliers
and subcontractors (Carreara et at, 2006).

234. Marks & Spencer’s Your M&S: Corporate Social Responsibility Report 2005, is a 32-page
document involving all their activities not only with respect to performance in 2004/2005 but also their
objectives for the future. Additionally, a more complex document than its previous Environmental Code of
Practice, the Environmental, Chemical and Factory Minimum Standards for Dyeing, Finishing and
Printing Clothing and Textiles, was published for the first time in September 2005, aiming for worker
safety, environmental compliance and control of chemicals in finished products. The standards subject to
reporting include the identified chemicals that cannot be present on final products, the aromatic amines
specified in Directive 2002/61/EC, the maximum presence of pesticides and insecticides by clusters of
fibres, etc. The standards apply to all companies that process products bearing Marks & Spencer labels,
including dyehouses, printworks, finishing facilities, laundries and tanneries, and have a level of specificity
that leaves little room for discretion.

235. In order to allay public suspicions, textile and clothing companies team with NGOs and trade
union organisations to ascertain their best efforts in the implementation of codes of labour practice. Six
major multi-stakeholder initiatives in the EU and the United States revolve around establishing

69
standardised codes of conduct based on ILO core standards, effective monitoring and public reporting.
They are: the Fair Labour Association (FLA), Social Accountability International (SAI), the Worldwide
Responsible Apparel Production (WRAP) Certification Program, the Workers Rights Consortium (WRC),
the Ethical Trading Initiative (ETI) and the Fair Wear Foundation (FWF).

236. As Table 5 shows, some go as far as to identify the subsidiaries and locations of companies in
developing countries that source international brands and retailers, especially to help combat child and
forced labour. Requirements and reach vary from initiative to initiative but they all provide a much needed
dose of comfort to the public. However, most of them may leave the consumer wanting. The continuum
goes from the no-holds-barred WRC approach to the no-public-information one of WRAP certification.

Table 5: Textiles and apparel industry -

Selected labour monitoring and reporting initiatives

Social Worldwide
Ethical Worker
Fair Labour Accountability Responsible Fair Wear
Trading Rights
Association International Apparel Foundation
Initiative Consortium
SA8000 Production

How reporting Internal and Audit reports Audit reports Audit reports Audit reports Own
is audited external evaluated by evaluated by and pilot and investigation
monitoring SAI. Other WRAP board studies remediation teams conduct
reports and parties may evaluated by plans submitted evaluations
audits receive them by ETI board and to FWF. directly
evaluated by signing member
FLA. Company confidentiality organisations
and FLA agreements.
develop
remediation
plans.

What is Monitored Factories granted WRAP Aggregate Brands, Full disclosure

disclosed companies are certification are provides results countries of of findings,
listed on FLA publicly neither public disclosed to the operation and including in
web site. FLA disclosed. information on public. Details number of WRC webpage
provides no its findings nor disclosed to suppliers by
information on on locations of ETI members country are
locations of factories, only. disclosed.
certified whether Other
factories. certified or not. information
remains
confidential.

Source: modified from O’Rourke, 2004

237. The Ethical Trading Initiative, with the auspices of the UK Department for International
Development, is one of the most widely used in the clothing sector. Among its members are DCC
Corporate Clothing, Debenhams Retail, Gap Inc., Levi Strauss & Co., Madison Hosiery, Marks & Spencer,
Marshalls and Quantum Clothing. Corporate members agree to produce an annual report about their
monitoring activities, participate in a pilot project with unions and disclose at least one sourcing company
for peer inspection. They also commit to abide by the ETI Base Code, which stipulates, for example, that
working conditions should be safe and hygienic, that child labour should not be used, that living wages
should be paid and that working hours should not be excessive.

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c) Consumer guides

238. The number of consumer information publications and online services for the textile and clothing
industry is mind-boggling, especially for the numerous segments of the production line, including
FabrikLink, FiberSource and TextileWeb. Most of them are linked either to manufacturers associations
promoting specific products or to NGOs that are active in the denunciation of multinational companies,
like Clothes for a Change, CCC Europe and Sweatshop Watch.

239. Both regular and CSR-dedicated consumer guides, like Ethical Consumer, ethiscore,
newconsumer, Lift the Label Ethical Directory, and Getethical, carry substantial information on textiles
and garments, including on clothing and clothing shops, carpets and flooring, ethical fashion, organic
cotton, fair trade, etc.

240. Information is as detailed as for other products, including product features, competing brands,
corporate profiles, and the like. However, the feeling conveyed by some ethical consumer guides is one of
solidarity with small ethical clothing producers and retailers, like People Tree, Bishopston Trading,
Gossypium, Ethical Wares and Chandni Chowk.

d) Company strategies

241. In practice, textiles and clothing companies use a complex marketing mix to inform on their CSR
performance, including the use of newspaper, magazine and television advertising, both in a targeted and
diffuse manner, sponsoring international CSR forums, and the more common one of producing visually-
attractive reporting, both in physical and virtual form.

242. Part of their branding strategy, each company is a universe in itself in its efforts to show
uniqueness and excellence, from presenting CSR efforts as an ever-challenging, enthusiastic process to
reconcile environmental and social mandates with the profit motive to using CSR disputes as a launching
pad for marketing efforts (see Box 11).

Box 11: Gap Inc.’s handling of a CSR dispute

A potentially damaging situation hit Gap Inc. in 2002 when a sourcing company in El Salvador, Tainan
Enterprises of Taiwan, closed its two clothing factories due to a labour dispute. The news reached the US textile
union UNITE, that made it available to the press, accusing Gap of turning its back on a problem it had itself
created. Gap laboriously reached an agreement with the textile industry union of El Salvador, which was
announced conjunctly by Gap and UNITE in the US in April 2004.
The agreement made the new factory the first clothing-export plant in the country to operate under a union
agreement that fully respects Salvadorian labour law. Also, independent monitoring by local NGOs was adopted
and publicised, a unique approach in the industry. Gap did not implement the same procedure to other suppliers in
over 50 countries of the South but the choreographed response helped neutralise the pressure exerted by the mass
media.

243. For instance, Patagonia, the US designer of outdoor clothing and gear, defines itself as
“committed to the core” to environmental action. This includes “working with processes that cause the
least harm to the environment” by carefully evaluating the raw materials they use, policing their waste and
supporting environmental advocacy”. Patagonia is a founding partner of the Conservation Alliance, a
group of companies that aim to inspire, promote and finance environmental solutions. It is also a member
of 1% for the Planet, having pledged one percent of sales to environmental grants since 1985. The message
to the consumer is that the Patagonia’s brand is inextricably associated with environmental conservation.

71
244. For 2004, one of the strategic goals of the Otto Group, the German clothing retailer, was to
strengthen the group’s public perception as a champion of socially-responsible trade. Among the actions
taken, foldouts devoted to Rugmark were included in its main catalogue, a free football bearing the
TransFair seal was given to customers and various products were advertised under a “fair feels good”
banner (the phrase appearing in English in otherwise German-language publications).

245. Mango, the Spanish designer of garments and accessories for women, has a presence in over
750 stores in 75 countries. It represents itself as having an ‘incrementalist’ CSR approach, having
demanded respect for labour conditions from their manufacturers from the very start of their operations
22 years ago. In the current decade they have made an effort to put CSR matters at the centre of their
production concerns –like using a single European laboratory to guarantee that the substances contained in
Mango clothes are not harmful to health and joining Setem, Spain’s Clean Clothes Campain– and made a
case to reflect it in communication campaigns coordinated by a newly-created Department of Corporate
Social Responsibility.

e) New trends

246. Textiles and clothing companies spend tens and even hundreds of millions of dollars every year
not only in advertising but also in R&D, exploring new ways to increase productivity, market share and
comparative advantages, both by increasing revenue and reducing costs. Whether these efforts redound in
more and more useful and user-friendly CSR information to consumers is the result of an uncertain
composite of trends in consumer demand, government regulation and corporate realities and sensitivities.
However, technological breakthroughs can shift the transparency-versus-vulnerability trade-off in the right
direction if convergence between public and private efforts can be attained. The utilisation of electronic
devices to convey exhaustive CSR information to consumers may be one such an opportunity. Box 12
provides an introduction to the topic.

Box 12: A wealth of information for garment shopping

The era when consumers can go shopping and, by reading a garment tag with their cell phones, hand-held
computers or shop scanners, obtain live, detailed information on the environmental and labour impact of
production vis-à-vis other products is with us already. Electronic and radio frequency identification (RFID)
tags and transponders and sophisticated supply chain management and tracking systems can readily provide a
wealth of information to the alert consumer.
Minuscule RFIDs, thinner than a sheet of paper and about the size of a small coin, store and remotely retrieve
data through their silicon chips and in-built antennas. The commercial versions, produced by PolyIC of
Germany and Philips of the Netherlands for instance, are already applied to container tracking, electronic toll
collection, cattle trace-back, identification badges, drivers’ licenses and passports (Malaysia, New Zealand,
Norway, Pakistan, United States).
Participating in this initiative are the European Committee for Standardisation (CEN), the International
Standards Organization (ISO) and the United Nations Centre for Trade Facilitation and Electronic Business
(UN/CEFACT). International corporations like Procter & Gamble, Wal-Mart, Hewlett-Packard, Johnson &
Johnson, IBM, DHL, Intel and others are pooling their logistics and information technology and
telecommunications expertise to spread this new tool.
The European Commission is aiming for an accelerated adoption of RFIDs across the European Union,
especially geared towards promoting trade by SMEs. It is expected that producers and distributors will adopt
embedded RFIDs in the clothing and textile industry in the second half of 2006. Department stores, the
traditional outlets for clothes, will benefit the most from this development, after a decade of predominance of
discount retailers like Wal-Mart and vertically integrated giants like Benetton, Esprit and Dolce e Gabbana.

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4. Tentative conclusions

247. CSR champions in the textile and clothing industry –the likes of Marks & Spencer and Hennes &
Mauritz– claim that their CSR-related information to the public is part of a point-of-no-return, increasing
disclosure trend. Will these efforts be sustained if world economic conditions deteriorate?

248. Some textile giants –the likes of Gap and Nike– claim that the current level of reporting is too
demanding and impinges on the bottom line. One alternative that has proven effective would be multi-
stakeholder, in-the-field action that is independently monitored. Which of the two trends will prevail?

249. Branding, at least in the clothing sector, is a concept that is here to stay. It provides a direct link
of familiarity, self-identity and trust between the company and the consumer. However, companies claim
that they compete in a Darwinian environment and that disclosing too much information, in CSR and other
areas, may make them more vulnerable to competitors. Can companies be expected to muster CSR
awareness in consumers at the cost of increasing their own vulnerability? Is there convincing evidence that
strategic CSR is perceived by companies as a global brand insurance (Werther and Chandler 2005)?

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 Annex IV.D.1: Selected CSR textile and clothing labels

Name Countries applied Textile group

Sweden (Good Environmental Choice, Swedish Society for

Bra Miljöval Textiles in general
Nature Conservation), part of Global Ecolabelling Network

Austria, Belgium, France, Germany, Netherlands, Spain,

Clean Clothes
Sweden, Switzerland, United Kingdom (European Garments
Campaign
Campaign Network)

Empfohlen vom
Germany (Recommended by IBR) Carpets
IBR

EU 25: Austria, Belgium, Cyprus, Czech Republic,

Denmark, Estonia, Finland, France, Germany, Greece,
Textile products (criteria
EU Eco-label Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg,
under development)
Malta, Poland, Portugal, Slovakia, Slovenia, Spain, Sweden,
Netherlands, United Kingdom

Australia (The Australian Ecolabel), Germany (Der blaue

Engel), Hong Kong (Green Label Scheme), India (Ecomark
Global
Scheme), Japan (Eco Mark), New Zealand (Environmental
Ecolabelling Textile products
Choice), Canada (Environmental Choice Program), Croatia
Network
(Environmental Label), Korea (Environmental Labelling
Program), Thailand (Green Label Program)

EU 15: Austria, Belgium, Denmark, Finland, France, Clothing, cleaning

Milieukeur Label Germany, Greece, Ireland, Italy, Luxembourg, Netherlands, cloths, toys, cotton hand
Portugal, Spain, Sweden, United Kingdom dryers

Neckermann
Germany (Eco Seal) Textiles in general
Umweltprädikat

No Sweat label US United States, Australia (Fair Wear) Clothing, footwear

No Sweat E-Tag United States (Ethical Trade Action Group) Textiles in general

Stiftung Warentest Germany Textiles in general

Germany, Denmark, Finland, Iceland, Norway, Sweden

Swan Textiles in general
(Nordic Ecolabel)

Umweltbaum Germany Textiles in general

WWF Panda Germany Textiles in general

Source: OECD

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V. Concluding remarks

250. Responsible consumption, in terms of measurable consumer demand for products that are
socially and environmentally produced, is still small but merits attention from businesses, other
stakeholders and governments.

251. One observation drawn from this study is that consumers are increasingly interested in finding
out about social and environmental practices of companies. In the case of the cosmetics industry this
demand was first supplier driven and it has now become consumer driven. In the case of cut flowers,
advocacy campaigns by civil society groups have played – and still are playing – a very prominent role, but
in many sectors nowadays consumers are driving this trend toward corporate social responsibility.

252. In all sectors studied, products are available in the market place that meet consumer preferences
for socially responsible production. However these products are often insufficiently identified as such. For
instance, many more flower growers today supply flowers to distributors meeting social and environmental
standards of production, but the final consumers do not know about it. The issue is that consumers are
finding it hard to gather information about the social and environmental engagement of corporations which
they can process when making a purchase decision. Our sectoral studies show that the level of information
available to consumers varies widely among industries, and among companies; but in general it is not high.

253. Making CSR visible to consumers remains a challenge for businesses and other stakeholders.
However, companies are being forced to be more inventive in the way they communicate CSR. From the
analysis of the use of companies’ different CSR marketing strategies, it appears that traditional marketing
strategies such as advertising, packaging and coverage through company magazines for consumers, are
becoming less effective, as more and more companies become involved in CSR, and consumers are
becoming increasingly critical of such overt marketing. New, more covert marketing strategies (guerrilla-
marketing for example) are relatively less expensive and sometimes more effective in making consumers
remember the name of a company and its CSR efforts.

254. Other players, such as employees, consumer guides, the media or NGOs are taking an important
part in the CSR disclosure process. As illustrated in the sector study on textiles and clothing, they are often
the ones pulling the alarm and distinguishing responsible from irresponsible companies..

255. Documenting in some detail important recent developments in different industries, the sectoral
studies raise some issues for reflection and discussion, including at the Workshop scheduled for Rotterdam
in June 2006 that will provide input for the final version of this report.

• Can we identify good practices? Identification of good practices in CSR communication, both in
individual sectors and across sectors, could enhance consumers’ understanding of communication
schemes, and help answer their need for more company disclosure on social and environmental
responsibility. This in turn can help develop markets and sustain trade for goods produced in a
CSR context.

• How important socially responsible production will become in the marketplace will in the end be
determined by the private sector. Some companies studied have raised their production standards
voluntarily in order to enhance their company profile or product differentiation compared to their
competitors. What would make companies interested and willing to seek collaboration with other
companies (their competitors), or why do they not collaborate? Is there room for such cooperation?

75
• Another question is what role does the retail sector play in creating a market for ethical or socially
responsible products, and in creating consumer awareness about the supply chain and the
production conditions?

• There are instances where the market for certified products is driven largely by producers and
traders above the retail level. Unaware of a certification label, the final consumer is not able to
make the choice of buying a certified product. There is also some evidence from the sector
analyses that companies that can guarantee supply chain control that ensures high quality and
reliability and traceability of delivery may find an attractive commercial partner in supermarkets
willing and able to promote their products to their mutual benefit. This raises the question what
role supermarkets can play in communicating CSR information to consumers.

• How does communication and implementation of CSR practices of multinational enterprises and
SMEs compare? The cosmetics case study shows how SMEs took the lead in CSR in this industry.
Is this an exceptional case? Are costs generally a barrier for SMEs to enter the CSR market
segment? How are communication schemes different between MNEs and SMEs?

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IPSOS poll of February 2004, cited in : Stratégies.fr (2004), Ces consommateurs qui se disent responsables,
Stratégies 1236, 13 May 2004 (http://strategies.fr/archives/1326/132602401/)

Sullivan, James (2004), Is there an “ENGO case” for CSR?, Report prepared for Pollution Probe, March
2004.

United Nations Environmental Programme (UNEP) (2005), Talk the Walk: Advancing sustainable
lifestyles through marketing and communications, Nairobi, Kenya.

Verbraucherzentrale Bundesverband e.V. (vzbv) (2004), Was Verbraucher wissen wollen. Ergebnisse einer
empirischen Studie zum Informationsbedarf der Verbraucher (Autor: Ingo Schoenheit), Berlin.

Section III. Types of Information schemes

Anderson, Roy (2003), Do Forest Certification Ecolabels Impact Consumer Behavior?, Wood Science &
Engineering of Oregon State University.

Association of Chartered Certified Accountants (ACCA) and Next Step Consulting LTD, 2001.
Environmental, Social and Sustainability Reporting on the World Wide Web. Published by the
Certified Accountants Educational Trust (CAET), London.

Barone, Michael J., Anthony D. Miyazaki, and Kimberly A. Taylor (2000), “The influence of cause-related
marketing on consumer choice: Does one good turn deserve another?”, in Journal of the Academy of
Marketing Science, 28 (2).

Becker-Olsen, Karen L., B. Andrew Cudmore, and Ronald Paul Hill (2006), “The impact of perceived
corporate social responsibility on consumer behaviour”, in Journal of Business Research, 59.

Belch, George E. and Michael A. Belch (1987), “The application of an expectancy-value operationalization
of function theory to examine attitudes of boycotters and nonboycotters of a consumer product”, in
Advances in Consumer Research, Melanie Wallendorf and Paul F. Anderson, Eds. Vol. 14. Provo,
UT: Association for Consumer Research.

Berens, Guido (2004), Corporate branding: the development of corporate associations and their influence
on stakeholder reactions, Doctoral dissertation, Erasmus University, Available at
(https://ep.eur.nl/handle/1765/1273.)

Brennan, Carol, Kelly Gallagher, and Morven McEachern (2003), “A review of the 'consumer interest' in
organic meat”, in International Journal of Consumer Studies, 27 (5), Blackwell Publishing.

Danker, Cora (2003), Environmental and Social Standards, Certification and Labelling for Cash Crops,
Rome. (ftp://ftp.fao.org/docrep/fao/006/Y5136E/Y5136E00.pdf )

Davis, Joel J. (1994), “Consumer response to corporate environmental advertising”, in Journal of

Consumer Marketing, 11 (2).

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De Pelsmacker, Patrick, Liesbeth Driesen, and Glenn Rayp (2005), "Do consumers care about ethics?
Willingness to pay for fair-trade coffee," in Journal of Consumer Affairs 39 (2), Blackwell
Publishing.

Dickson, Marsha A. (2001), “Utility of no sweat labels for apparel consumers: profiling label users and
predicting their purchases”, in Journal of Consumer Affairs, Blackwell Publishing.

Duong, Quynh-Lien. (2003), Vers une typologie des outils de la communication sur la responsabilité
sociale de l’entreprise. Université de Rennes.

EC Newsdesk (28/03/2006), Strategies and Management: A two way benefit? – What businesses learn,
gain from NGO partnerships. (www.ethicalcorp.com/content.asp?ContentID=4173)

Edelman. Blogger Survey 2005, Analysis. (https://extranet.edelman.com/bloggerstudy/ )

Ellen, Pam Scholder, Deborah J. Webb, and Lois A. Mohr (2006), “Building corporate associations:
consumer attributions for corporate socially responsible programs”, Journal of the Academy of
Marketing Science, 34 (2).

Giovannucci, Daniele (2003), The State of Sustainable Coffee: A study of twelve major market,
Worldbank, Washington D.C.

Hanson, Rasmus (2005), Why ecolabels?, WWF-Norway.

(http://www.wwf.no/core/pdf/wwf_escaped_farmed_fish_2005.pdf )

Ipsos (2005), One Bad Story: the Effect of Negative Press on Corporate Reputation. (www.ipsos-
ideas.com/article.cfm?id=2678)

Keller, Kevin Lane and David A. Aaker (1998), “The impact of corporate marketing on a company's brand
extensions”, in Corporate Reputation Review, 1 (4).

Klein, Jill and Niraj Dawar (2004), “Corporate social responsibility and consumers' attributions and brand
evaluations in a product-harm crisis”, in International Journal of Research in Marketing, 21.

Kolk, Ans and Jonatan Pinkse (2005), Stakeholder mismanagement and corporate social responsibility
crises. University of Amsterdam Business school.

Lichtenstein, Donald R., Minette Drumwright, and Bridgette M. Braig (2004), “The effect of corporate
social responsibility on customer donations to corporate-supported nonprofits”, in Journal of
Marketing, 68 (October).

Loureiro, Maria L., Jill J. McCluskey, and Ron C. Mittelhammer (2002), “Will consumers pay a premium
for eco-labeled apples?”, in Journal of Consumer Affairs, 36 (2), Blackwell Publishing

Maronick, Thomas J. and J. Craig Andrews (1999), “The role of qualifying language on consumer
perceptions of environmental claims”, in Journal of Consumer Affairs, 33 (2).

Mayer, Robert N., Debra L. Scammon, and Cathleen D. Zick (1993), “Poisoning the well: do
environmental claims strain consumer credulity?”, in Advances in Consumer Research, 20.

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Mohr, Lois A., Dogan Eroglu, and Pam Scholder Ellen (1998), “The development and testing of a measure
of skepticism toward environmental claims in marketers' communications”, in Journal of Consumer
Affairs, 32 (1).

Mohr, Lois A., Deborah J. Webb, and Katherine E. Harris (2001), “Do consumers expect companies to be
socially responsible? The impact of corporate social responsibility on buying behaviour”, in Journal
of Consumer Affairs, 35 (1).

Mohr, Lois A. and Deborah J. Webb (2005), “The effects of corporate social responsibility and price on
consumer responses”, in Journal of Consumer Affairs, 39 (1).

Murray, Keith B. and Christine M. Vogel (1997), “Using a hierarchy-of-effects approach to gauge the
effectiveness of corporate social responsibility to generate goodwill toward the firm: Financial
versus nonfinancial impacts”, in Journal of Business Research, 38.

Newell, Stephen J., Ronald E. Goldsmith, and Edgar J. Banzhaf (1998), “The effect of misleading
environmental claims on consumer perceptions of advertisements”, in Journal of Marketing Theory
and Practice, 6 (2).

Nuij, Robert (2003), Is the EU Eco-label fit for use: Key challenges for the European Eco-label scheme in
the years ahead, Discussion paper for the Policy Management Group of the EU Eco-labelling Board,
Brussels.
(http://europa.eu.int/comm/environment/ecolabel/pdf/work_plan/mgtgroups/policy/fitforuse_discuss
ionpaper_0503.pdf )

OECD (1997), Eco-Labelling: Actual Effects of Selected Programs [OECD/GD(97)105], Paris

OECD (2001), OECD Environment Directorate Programme on Sustainable Consumption: Experts’

Workshop on Information and Consumer Decision-making for Sustainable Consumption
[DSTI/CP/RD(2001)16], Paris.

OECD (2001), Codes of Conduct – Exploring the Economic Significance [TD/TC/WP(2001)10/FINAL],

Paris.

OECD (2001), Corporate Responsibility Practice of Emerging Market Companies – A Fact Finding Study
[DA/INV/NCP(2005)2, Paris.

OECD (2001), Corporate Responsibility: Private Initiatives and Public Goals, Paris.

OECD (2003), Developing-country Access to Developed-country Markets under Selected Eco-Labelling

Programmes [COM/ENV/TD92003]30], Paris

Pashupati, Kartik, Laura Arpan, and Alexandre Nikolaev (2002), “Corporate advertising as inoculation
against negative news: an experimental investigation of efficacy and presentation order effects”, in
Journal of Current Issues and Research in Advertising, 24 (2).

Pracejus, John W. and G. Douglas Olsen (2004), "The role of brand/cause fit in the effectiveness of cause-
related marketing campaigns", in Journal of Business Research, 57.

Procter & Gamble (P&G) (2005), Environmental labels or “Eco0labels”.

(http://www.pgperspectives.com/en_UK/policyissues/environmentallabelling_en.html)

81
Roe, Brian, Mario F. Teisl, Huaping Rong, and Alan S. Levy (2001), "Characteristics of consumer-
preferred labeling policies: Experimental evidence from price and environmental disclosure for
deregulated electricity services", Journal of Consumer Affairs, 35 (1).

Roner, Lisa (2005) Corporate Responsibility and Public Relations, Ethical Corporationi Special Reports.
(www.ethicalcorp.com/content.asp?ContentID=3852 )

Sedjo, Roger A. and Stephen K. Swallow (2002) “Voluntary Eco-Labeling and the Price Premium”, in
Land Economics, Volume 78, Number 2, University of Wisconsin

Sen, Sankar, C. B. Bhattacharya, and Daniel Korschun (2006), "The role of corporate social responsibility
in strengthening multiple stakeholder relationships: a field experiment", in Journal of the Academy
of Marketing Science, 34 (2).

Social Market Foundation (SMF) (2003), Race to the Top: how government, business and consumers can
drive CSR.
(http://www.origonews.com/filemgmt_data/files/Consumers%20need%20to%20help%20plug%20th
e%20good%20intentions%20gap.pdf)

Stannard-Friel, Jessica. Cause Marketing Forum (2005), Proving that Cause Marketing is a Win-Win.
(www.causemarketingforum.com/page.asp?ID=345 )

Strahilevitz, Michal (2003), "The effects of prior impressions of a firm's ethics on the success of a cause-
related marketing campaign: Do the good look better while the bad look worse?", in Journal of
Nonprofit & Public Sector Marketing, 11 (1).

Swaen, Valérie and Joëlle Vanhamme (2004), "See how 'good' we are: the dangers of using corporate
social activities in communication campaigns", in Advances in Consumer Research, 31.

The Economist (22/01/05), The World according to CSR, A survey on corporate social responsibility.
Special report “the Good Company”. (www.economist.com)

UNEP (2005), The Trade and Environment Effects of Ecolabels: Assessment and Response.
(http://www.unep.ch/etb/publications/Ecolabelpap141005f.pdf )

United Nations Environment Programme, UN Global Compact and Utopies (2005), Talk the Walk,
Advancing Sustainable Lifestyles through Marketing and Communication.

Winters, Lewis C. (1988), "Does it pay to advertise to hostile audiences with corporate advertising?", in
Journal of Advertising Research, 28 (June/July).

Verhoef, Peter C. (2005), “Explaining purchases of organic meat by Dutch consumers”, in European
Review of Agricultural Economics 32 (2), Oxford University Press.

Zadek, Simon, Sanjiv Lingayah, and Maya Forstater (1998), Social Labels: Tools for Ethical Trade, New
Economics Foundation for the European Commission.

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 Section IV. Sectoral studies

(Fisheries)

Anderson, James L. (2004), The International Seafood Trade, University of Rhode Island, Kingston.

Brown, James (2004), An Account of the Dolphin-safe Tuna Issue in the UK,” IIEP, London.
(http://www.ieep.org.uk/publications/pdfs/2004/dolphinsafetuna.pdf)

Decision news media (2004), The Truth Behind Food Labels.(http://www.foodnavigator.com/news/news-

NG.asp?id=53610)

Dryden S (2005), UK Retail Market Overview, SEAFISH, London.

EC (2005), Fisheries and Aquaculture in Europe, Brussels.

FAO press release (2005), Ecolabelling schemes to support sustainable fisheries get a boost.
(http://www.fao.org/newsroom/en/news/2005/100302/index.html)

FAO (2004), The State of World Fisheries and Aquaculture – 2004, Rome.
(http://www.fao.org/documents/show_cdr.asp?url_file=/DOCREP/007/y5600e/y5600e00.htm)

KPMG (2005), International Survey of Corporate Responsibility Reporting 2005, University of

Amsterdam and KPMG Global Sustainability Service.

OECD (2005), Environmental Requirements and Market Access, Paris.

Peacey, Jonathan (2000), The Marine Stewardship Council Fisheries Certification Program: Progress and
Challenges, Paper presented to the IIFET 2000 Workshop, Corvallis, Oregon.

Phillip, Bruce, Trevor Ward and Chet Chaffee (2003), Eco-labelling in Fisheries: What is it all about?,
Blackwell Publishing, Oxford.

Seafood Choices Alliance (2003), The Marketplace for Sustainable Seafood: Growing appetites and
shrinking sea, Washington D.C. (http://www.seaweb.org/documents/PR_2003.6.5.pdf)

Searle, Robert, Susan Colby and Katie Smith Milway (2004), Moving Eco-Certification Mainstream, The
Bridgespan Group. (http://www.bridgespangroup.org/PDF/MovingEcoCertificationMainstream.pdf )

Seaweb press release (2005), Seafood Summit 2006 Showcases Global Sustainability Movement and
Future of Seafood. (http://www.seaweb.org/mediacenter/press-2December05.php)

(Cut flower)

Bioflora (2006), Bioflora – growth in organic floriculture, January 2006.

(http://www.snm.nl/pdf/0100_bioflora__growth_in_organic_floriculture_definitief_januari_2006.pd
f)

Centre for the Promotion of Imports from Developing Countries (CBI) (2005), Cut flowers and foliage, EU
Market Survey 2005.

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Collinson, Chris, (2001) The business costs of ethical supply chain management: Kenya flower industry
case study’, Natural Resources Institute, May 2001.

Demery, Paul (2006), Flower power: Organic Bouquet uses the web to cultivate a national market for its
niche product, internet retailer, feature article, February 2006.

Dolan, Catherine and Maggie Opondo (2005), Seeking Common Ground.

Multistakeholder Initiatives in Kenya’s Cut Flower Industry’, Journal of Corporate Citizenship, Special
Issue on 'Corporate Citizenship in Africa: Progress Looking Back; Prospects Looking Forward' (8,
Summer): 87-98.

Dole, Corporate Social Responsibility Report, 2005.

(http://www.dole.com/CompanyInfo/CorpSocialResp/pdfs/csp.pdf)

Floral Management, It’s a Greem, November 2003.

IDS, 2004.

Krier, Jean Marie, Fair Trade in Europe 2005 – Facts and Figures on Fair Trade in 25 European
countries, Fair Trade Advocacy Office, Brussels, 2006.

Mathias, Mauricio C., Proflora 2005: the brighter side of Colombia, FlowerTech, 2005, Vol. 8, No. 8, p.
24-26. (www.HortiWorld.nl)

OECD, Environmental requirements and market access (Chapter 17: Eco-labels for cut flowers). Paris,
2005, pp. 231-238.

OECD, Private standards and the shaping of the agro-food system. Working Group on Agricultural
Policies and Markets, AGR/CA/APM(2004)24. Paris, 2004.

Organic Bouquet, Scientific Certification Systems (SCS) and NSF International (2005), International
experts tackle sustainability issues in floral sector; announce new American national standard
initiative. Press release, 3 June 2005, San Francisco, California.

Oxfam Canada, Oxfam Canada Valentine’s Day 2004 Action (Archive), Oxfam News, 2004.

Scientific Certification Systems (SCS), Straus Communications/Organic Bouquet and NSF International,
International experts tackle sustainability issues in floral sector; announce new American national
standard initiative, Press Release, San Francisco, 3 June 2005.

Tallontire, A. and Vorley, B. Achieving fairness in trading between supermarkets and their agrifood supply
chains. Briefing paper for UK Food Group, to be published on http://www.ukg.org.uk/, 2005.

Tallontire, A., Dolan, C., Smith S., and Barrierentos, S. Reaching the marginalised? Gender, value chains
and ethical trade in African horticulture. Development in Practice 15 (3&4), 2005.

Tallontire A. and Greenhalgh P., Establishing CSR drivers in agribusiness. Final report for Foreign
Investment Advisory Service, International Finance Cooperation and World Bank, August 2005,
National Resource Institute, Kent, United Kingdom.

84
Tenenbaum, David (2002), Would a rose not smell as sweet? Environmental Health Perspectives, Vol. 110,
No. 5, May 2002, p. A240-247.

United States International Trade Commission, (2003), Industry and Trade Summary: Cut flowers. USITC
Publication 3580, February 2003. Washington, D.C., United States.

(Cosmetics)

Avon (2004), Corporate Social Responsibility Report 2004.

Cosmetic News (2001), Social Responsibility: A Brand Building Tool. (www.cosmeticnews.com/)

Cosmetic News (2002), Retail: How to sell natural beauty? (www.cosmeticnews.com/)

E. C. (2006), Enterprise and Industry: Cosmetics.

(www.europa.eu.int/comm/enterprise/cosmetics/index_en.htm )

Foster, Dorothy (2002), “Burt Bees creates a natural buzz”, in Cosmetic News. (www.cosmeticnews.com/)

Invigorating Through Innovation (2003), The Case for Natural Selection, Euopean Cosmetic Market,
February 2003. (www.article13.com)

L’Oreal (2004), Sustainable Development report 2004.

L’Oreal (2004), L’Oreal Finance 2006. (www.loreal-finance.com)

Natura (2004), Natura Annual Report 2004.

Risk and Policy Analyst (2003), Comparative Study on Cosmetics Legislation. Quotes Eurostat data (2003).

Shiseido (2004), The Shiseido way. with our society: 2004 CSR report.

The Body Shop (2005), The Body Shop Values Report 2005.

United Nations Environment Programme, UN Global Compact and Utopies (2005), Talk the Walk,
Advancing Sustainable Lifestyles through Marketing and Communication.

Williams, Jane. Cosmetic News (01/01/2002). Natural product are changing the market.
(www.cosmeticnews.com/)

(Textiles and clothing)

Carrera, J., J. Ortiz, G. Secchiari, L. Malamud and V. Melichopulos (2006), El sector textil y de
indumentaria desde la perspectiva de género, Research undertaken by Fundación El Otro with the
support of Oxfam Novib and the Dutch Foreign Ministry. March.
(http://www.redpuentes.org/recursos/docs_redpuentes/elotro)

Dickson, M. A. (2001), “Utility of no sweat labels for apparel consumers: profiling label users and
predicting their purchases”, in Journal of Consumer Affairs, Blackwell Publishing.

85
Fair Labour Association (2005), Missing link: Suppliers institutionalizing compliance, New Delhi, 22 June
2005.

Institute of Social and Ethical Accountability (2004), Managing the transition to a responsible global
textiles and garment industry: an integrated study of research by AccountAbility, Business for Social
Responsibility and The World Bank for the MFA Forum.
(http://www.bsr.org/Meta/MFAIntegrated_Final.pdf )

International Labour Organization (ILO) (2005), Facts on child labour. Geneva.

http://www.ilo.org/public/english/bureau/inf/download/child/childday04.pdf

Nordås, H. K. (2004), The Global Textile and Clothing Industry post the Agreement on Textiles and
Clothin,. Discussion Paper No. 5. Geneva, Switzerland: World Trade Organization.
(http://www.wto.org/english/res_e/booksp_e/discussion_papers5_e.pdf )

Steedman, P. (2005), Desperately seeking sustainability? Summary of NCC research into information and
advice on sustainable lifestyle. London, United Kingdom: National Consumer Council, August.
(http://www.ncc.org.uk/responsibleconsumption/desperate.pdf)

Werther, W. B., Jr. and D. Chandler (2005), “Strategic corporate social responsibility as global brand
insurance”, in Business Horizons, Vol. 48, 15 July.

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